New Zealand’s housing market is once again flying high, as our national median price hit a record high of $629,000 at the end of 2019 and continued strongly into January 2020.
Auckland prices remain flat, continuing a pattern that’s now two years old, with the median price of $875,000 still down on the $900,000 record set in March 2017. Sales of Auckland apartments are picking up, which we’ve seen with our own sales department and is backed up by strong bidding at recent auctions.
However, the number of sales in January was up almost 10% on January 2019, which is a positive indicator that we should see some modest growth this year. Westpac’s economists are predicting a nationwide house price increase of 10% in 2020, with the added forecast that interest rates will begin to rise from later this year. Our economy is broadly performing well, with low unemployment and steady growth, which helps boost general economic confidence.
It’s still a good time to be a borrower right now though, with record low interest rates starting from 3.20% for those with plenty of equity. However, there was some hope the Reserve Bank might ease up on its loan-to-value ratio restrictions and that hasn’t happened. Banks remain pretty cagey when it comes to lending – they’re still analysing spending, debt and income pretty closely before they approve any loans.
This is the year when housing becomes a hot-button issue, with plenty of press already talking about the housing crisis, homelessness and Kiwibuild as major talking points for the upcoming election. Expect to see talk of tax reforms and housing affordability back on the table as the posters go back up on a roundabout near you.
In the meantime, for apartments owners the rents are gradually increasing in the order of about $10 with each annual rent review – but only if you’ve maintained your property and presented it well. If your property’s rent isn’t going up a little bit each year, that means you probably have more work to do to make it meet the market.