Much is being made of the decline in prices of real estate throughout the country and the decline in the number of sales. We note that commentators are now ‘inflation adjusting’ these declines and talking about a 15-20% decline in values. Can’t say we recall them ‘inflation adjusting’ the increases.
What we believe they are confusing is an actual drop in values and a drop in the rate of growth. In parts of the country property values are still increasing but at a slower rate of increase. For example, in Auckland the rolling annualised rate of growth is 18.3% over the past 3 months compared to a rolling annualised growth of 22.6% at the end of April. In Christchurch however there was true growth of 1.8% over the past 3 months. 31.6% over past 12 months.
Sales numbers are falling, the time taken to sell a property is increasing. The talk is that it has become a buyers’ market – yet at the same time commentators are lamenting how hard it is for people – especially new home buyers – to get mortgages. There seems to be hype, confusion, disagreement, disappointment, dis-information out there none of which is really helping the property sector. (Have you noted the increased activity by real estate agents over recent months as they have to search for business. A sure sign that things have changed).
Other than the rental sector. All of the above, coupled with increasing interest rates, higher inflation, increased migration, increased numbers in education, new apprenticeship schemes, (sadly) an increase in the divorce rate point to an increasing demand for quality rental property at a time when rental availability is low.