By Tony Field
The Real Estate Institute says house prices hit a new high in December.
The median price was $360,000, but volumes were low and prices actually fell according to a second measure used by the institute.
Veteran property investor Olly Newland is cautious about the year ahead. He has been investing in property for 50 years, and is not surprised by the latest rise in house prices.
“The property market is quite strong now, and in my view it will continue to be quite strong,” says Mr Newland. “I don’t necessarily see a huge spike in prices, but I think we are going to have the market increasing in strength slowly over the next few months, and over the next year.”
Mr Newland says there is a chance of another recession or of massive inflation.
Although the median price is at a record high, the Real Estate Institute’s housing index, which smooths out the effects of sales at the top and bottom of the market, is almost four percent below its peak. The numbers of houses selling right now is also relatively low.
“The fact is, 95 percent of people don’t have to buy and don’t have to sell. So if they don’t think there is going to be a dollar in it for them, they don’t bother. They either renovate what they are living in or they just stay content with what they have got,” he says.
“On the surface it looks like we are back to boom time,” says Bernard Hickey of Interest.co.nz.
“But when you scrape below the surface you can see that the demand is not there from first home buyers, and from residential property investors.”
Mr Hickey had predicted house prices would fall 30 percent, but he later revised that to 15 percent – a prediction he is sticking with, as the banks tighten up their lending.
“New Zealand’s house prices, when compared with income, are the second highest in the entire world – just underneath South Africa,” he says.
Mr Newland and Mr Hickey agree that it will remain hard going for first home buyers.
It has been the New Zealand way for people to own their own home. But Mr Newland believes that is changing. He says in future 40 percent of people will own their own house – everyone else will be renting.
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