Majority of Kiwis expect house prices to rise

The majority of Kiwis expect house prices to rise over the next 12 months, but the foreign buyer ban appears to have dented confidence in the market, according to the results of a new survey.

Colliers Internationals’ quarterly house price outlook survey found that expectations of growth in the residential property market were high, but had dipped slightly after a rebound the previous quarter.

Kiwis were most confident about prices rising in Queenstown, but felt least positive about Christchurch’s property market. Survey respondents also indicated there is room for growth in Auckland although were more bullish about new-build houses and apartments in the city than existing houses.

Colliers head of research Chris Dibble said the lower level of positivity recorded this quarter seems to be driven by the foreign buyer ban.

The ban, which comes into force on October 22, will prevent foreigners from purchasing Kiwi homes, although the law includes allowances for Australians and Singaporeans to buy local homes and for foreigners to buy 60 per cent of the units on offer in major apartment complexes of 20 units or more.

Mr Dibble said: “We’re still seeing a positive picture for residential prices throughout the country.

“Respondents expecting median prices to rise over the next 12 months still outweigh those who expect a decline, but the overall result of a net positive 26 percent this quarter is down from a net positive of 36 percent recorded three months ago.

“The lower level of positivity this quarter seems to surround changes to the Overseas Investment Amendment Bill.

“Almost half of our survey respondents were pessimistic about the market impact when discussing the new legislation. Just 24 percent were positive about the ban.”

Earlier this week, Westpac economists predicted that houses prices in Auckland and Queenstown would be hurt by the foreign buyer ban but a big drop was unlikely.

According to the Colliers survey, there is still an expectation that median prices will increase in Auckland, however, confidence in the city has waned over the winter period. The survey showed a net positive 16 percent for this quarter, down from a net positive 28 percent the previous quarter

“Development activity and lower sales volumes remain front of mind, with respondents more confident about price growth for new-build houses and apartments in Auckland than for existing houses and apartments.”

He said that the increase in house-building activity by the likes of KiwiBuild will have contributed to the increased levels of confidence around new-builds. The survey showed a net positive 26 percent for new houses in Auckland, and a net positive 20 percent for new apartments. This compares to a net positive 15 percent and 6 percent for existing houses and apartments.

Mr Dibble said there was similar picture across property types in Wellington and Christchurch.

Despite recent sales figures from CoreLogic showing a slowdown in Queenstown, the Colliers survey results showed that New Zealanders believe that the city has the best performing property market.

Mr Dibble said: “Queenstown’s ranking is a reflection of market dynamics there – a high level of demand for residential property but limited supply. Tauranga and Wellington also rated highly and that speaks to the strong economies and solid demographics in both centres.”

Dunedin and Whangarei were the only two locations to record an increase in the net percentage of respondents expecting the median price to increase over the next 12 months.

OneRoof Editor Owen Vaughan said: “The strong performance of regional centres in the survey results shows that New Zealanders believe there is scope for further price growth outside the main metro centres.

“The commitment to improve infrastructure in Northland has paid off, with Kiwis feeling increasingly confident about the long-term future of Whangarei’s housing market, while increased tourism activity in Rotorua and Napier will have contributed to positivity in those markets.”

New Zealanders had lower expectations for Christchurch's housing market, with the city recording a net positive result of -6 percent, down 6 percentage points on the previous quarter and 9 points on September 2017.

Mr Vaughan said: “Although the market in Christchurch has largely remained flat over the past year the city’s rebuild efforts are a cause for cheer, with the net percentage of respondents in Colliers’ survey expecting the median price to increase in new houses and new apartments higher than for existing stock.”

The residential survey drew on 6,634 responses.