The biggest house price surge in history occurred under Labour—but that tells us little
According to Stuff, the policies already proposed suggest that the incoming government wants to put the brakes on a property market that has already slowed. Yet data shows that New Zealand's largest house price rise occurred under a Labour government.
The figures come from CoreLogic. House prices rose 49% under National between 1990 and 1999. Under Labour, they rose 113% between 1999 and 2008. During the most recently completed term of government, nationwide house prices rose 69%.
Auckland Property Investors' Association president Andrew Bruce said these figures might surprise many people who assumed that a Labour government meant lower capital gains.
BNZ chief economist Tony Alexander used data dating from 1961 to analyse average annual house price growth under each party. The figures showed average annual increases of 9.1% under National and 16.8% under Labour. Excluding the oil price increases and runaway inflation under Labour in 1972 would adjust the latter figure to 13.9%.
Alexander said he would not regard this analysis as a sound guide to future house prices. Extrapolating from the figures would suggest that average house prices would rise 125%–150% if Labour remained in government for 9 years. But that would be unreasonable. He noted that interest rates underwent structural reductions in 1992 and after the financial crisis. Lower financing costs pushed up house prices and attracted investors seeking returns. Over the past thirty years, the property market had become globalised. New buyers entering the market had not necessarily lived in New Zealand before. Now, however, fewer new overseas buyers were entering.
CoreLogic head of research Nick Goodall said people needed to recognise one important point: the property market's performance reflected a combination of factors, including the Canterbury earthquakes and the global financial crisis. Goodall said house price growth in the early two-thousands was driven by a strong economy, population growth and a low employment rate, alongside relatively easy credit that made borrowing accessible.
A pronounced supply–demand imbalance: property listings halve over a decade
According to the Realestate website, New Zealand's largest property listings site had 47,958 homes available for sale in October 2007. A decade later, that figure had fallen to 24,307 (October 2017).
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“Historically, the property market has followed a cycle. Looking back over the past decade, asking price growth has stabilised despite a continuing decline in the stock of listings,” said Realestate.co.nz spokesperson Vanessa. She noted that available listings had fallen sharply over the past three years. In October 2014, the website had 39,917 listings. The current total of 24,307 in October 2017 represented a 40% decline compared with 3 years earlier. This reflected the growing number of New Zealanders returning home in recent years, alongside migrants arriving from other countries. Population growth had left New Zealand facing a shortage of supply.
Of course, this does not mean home ownership is out of reach. The tiny house movement, co-housing, apartments and duplexes are emerging as alternative housing options. Co-housing involves households living in a residential complex and sharing communal activities and facilities. A duplex is the smallest type of investment apartment building: a single property divided into two separate units, each of which can have its own entrance, kitchen, bedrooms and other facilities.
Forecast: house prices to decline steadily
According to the New Zealand Herald, current BNZ chief executive Anthony Healy predicted a steady property market ahead, while the housing shortage would continue to drive growth in banks' mortgage lending. He had repeatedly expressed concern about housing affordability in New Zealand, but did not believe the recent downturn in Auckland would be enough to make homes affordable. “The problem still hasn't been solved. There are still many more houses to build.”
September building consents reach a 13-year high
After several consecutive months of increases, figures released by Stats NZ on 31 October showed a decline in new dwelling consents in September. “After adjusting for seasonal factors, the number of new dwelling consents fell 2.3% in September.”
The number of new dwelling consents reached 2770 in September 2017, up 6% on September the previous year. Despite a substantial decline in Canterbury, the annual total for the year ended September 2017 was 30,892 new dwelling consents, up 3.0% year on year.
Growth in nationwide building consents in September 2017 came mainly from townhouses and apartments, while consent applications for retirement village units and standalone houses fell slightly. The 2770 new dwelling consents comprised 1843 standalone houses; 427 townhouses, flats and units; 415 apartments; and 85 retirement village units.
In the year ended September 2017, the following regions received the most building consents:
Auckland—10317 new dwelling consents
Canterbury—5122 new dwelling consents
Waikato—3596 new dwelling consents
Bay of Plenty—2596 new dwelling consents
Overall, the number of building consents issued was trending upwards and had reached its highest level since early 2004.
Auckland Build 2017: Technology poised to transform construction
Auckland Build, which brought together numerous property companies and architectural practices, took place at ASB Showgrounds on 2 November–3. Applications of cutting-edge technologies such as VR and AR in the property industry, alongside the arrival of PlanGrid construction management software, brought fresh elements to the traditional trade show. Meanwhile, traditional architectural ideas and building materials remained popular with many attendees.
Auckland Build offered a sense that tradition and technology were beginning to compete within New Zealand's construction industry.
As the industry changes, practitioners also need to rethink how they do business. Speaking at Auckland Build on 2 November, Will Zhang, general manager of New Zealand marketing company MultiMarketing, said product strategy required an open mind. Through technology exports and changes to operating models, products originally aimed solely at the Chinese market could become products made in China for the world.