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House prices: Experts predict where the market is headed
9 minutes to read
After last month s big policy announcement, what s left for the Government to do on housing affordability? Plenty, say economists who will be looking to this month s Budget for more action on the supply side of the market equation.
Essentially, there are two ways to affect prices.
You can limit demand by either reducing the number of potential buyers or by making it less attractive to buy more houses.
On that front, the Government appears to have gone about as far as it can without introducing a full capital gains tax (which it has ruled out).
In March, the Government announced a shakeup of the property market aimed at increasing housing affordability, doubling the ‘bright-line test’ on residential property to 10 years and promising to spend billions trying to accelerate housing supply. The package included $3.8 billion for a Housing Acceleration Fund aimed at enabling thousands of new homes by footing the bill for infrastructure such as pipes and new roads.
Ross Giblin/Stuff In addition, Kāinga Ora would borrow a further $2 billion for strategic land purchases. The ministry noted that consents were at their highest level since 1973, but due to population increase country was only building 7.5 new homes per 1000 people, compared to 13.4 homes per 1000 people in 1973.
It s the seventh month in a row that prices have hit a new record and Trade Me Property sales director Gavin Lloyd says they show no sign of slowing any time soon . While this will be music to the ears of homeowners, no doubt it s hard to hear for prospective buyers who have been hit with relentless price increases for months, Lloyd said.
Demand outstripping supply is a significant factor pushing prices up. Nationwide in March, demand was up 26 percent year-on-year, while supply fell 9 percent. As we have seen consistently over the past few months, demand outweighed supply in March, putting pressure on the market and resulting in ongoing price increases.