Welcome to this week's issue of the Weekly Property Roundup. Here are the news items of interest from the week. 

Boring housing data good news for first-home buyers (Source)

New data from CoreLogic shows property values fell 0.4% in November. CoreLogic says the housing market is in a holding pattern and is likely to stay relatively flat until at least February or March but is likely to pick up next year as the impact of lower mortgage rates kicks in and the wider economy improves.

Our view: This signals that supply outweighs demand. The rate of decline in property values has slowed, as there is still more stock than there are buyers. However, this is likely to change. Looking at previous property cycles, when interest rates begin to drop and more buyers can secure mortgages they can afford, the market typically sees increased competition for homes, which drives up prices. The question is when this shift will occur. According to the data in this article, property values slowed from an average of 0.8% per month from April to August down to an average of 0.3% from September to November. This suggests that the floor in property values is not far off.

A third fewer new homes consented annually compared to two years ago (Source) 

The number of building consents being issued for new homes is still falling and is now at a five-year low.

The latest figures from Statistics NZ reveal 33,467 new dwellings throughout the country were consented in the year to October - down 16.1% compared to the same time last year, and down 33.4% compared to the October-year peak of 50,252 in 2022.

Our view: Even though supply currently outstrips demand, the lack of new housing in the pipeline would suggest that future supply could be tight, inevitably pushing up house prices.

What next for the official cash rate? And what should you do? (Source)

Following the most recent OCR cut, ASB is forecasting a further 50bps cut in February. Beyond February they are predicting two further cuts in April and May of 25bps each to bring the OCR back to a trough of 3.25%.

ANZ has also said that a 50bps cut in February is what they would expect.

Our view: The drops in the OCR have led to a more positive sentiment for the NZ housing market. The lower it drops the more buyers will inevitably be looking for property. So as interest rates decline do you fix or float your mortgage? Luckily you don’t have to make this call on your own. Talk to us about the best course of action for your mortgage. Wendy Ryan Kidd | Erskine Owen

Build to rent project: NAB warns foreign investor tax won't alone overcome roadblocks to the sector (Source)

Across the Tasman, National Australia Bank warns new legislation, putting tax for foreign investors on par with Australia-based-investors at 15%, is not enough by itself to draw more foreign capital into the build-to-rent sector. It says the new laws, introduced last week, will do little to overcome roadblocks to investment such as high state taxes and construction costs.

This put NAB at odds with Macquarie, where Asia-Pacific head of real estate James Kemp said the new rules were beneficial.

“That’s because you’ve seen a situation where foreign capital is familiar with the build-to-rent product in a lot of other established markets globally and the managed investment trust legislation provides stability and aligns investment to build-to-rent like every other commercial asset class,” Kemp said.

Australia property prices: House prices forecast to rise in 2025 (Source)

Australian, house prices are tipped to rise by a predicted 4%-6% in 2025 if interest rates are cut. With demand already high, the shortage of homes paired with lower interest rates will drive house price growth with the only factor holding back the speed of growth being buyers’ affordability limits.

According to Domain’s 2025 Forecast Report, cities such as Perth and Adelaide will see the most growth, with house prices predicted to increase by 8% - 10% in Perth and 7% to 9% in Adelaide.

Domain Chief of Research Dr Nicola Powell has said price growth will remain slow in the first half of the year, but with interest rate cuts predicted in the second half of the year, more buyers are expected to enter the market.

Have a great weekend!

From the team at Erskine Owen.