Further signs are emerging that the residential property market is starting to pick up and an expected surge in immigration numbers plus a shortage of new construction will push up house prices.
The latest glimmer of hope for the market comes from BNZ’s first monthly survey readers this year. The survey, which had around 16,000 responses, showed an overall deterioration in sentiment from the previous survey in December.
A net 23% of respondents expect the economy to get worse over the coming year from 6% three months ago.
BNZ economist Tony Alexander says businesses generally are facing cash flow constraints and are trimming expenses in expectation of tough conditions continuing.
While most sectors remained weak there was one very clear change in this month’s survey compared to last year’s ones.
He says that is in residential real estate.
“Lower interest rates along with increasing perceptions of a shortage have contributed to a significant improvement in sentiment. At the same time as vendors have become more realistic in the prices they will accept more buyers have been entering the market.
“They appear to be a mixture of both owner-occupiers getting on with life and investors attracted by yield compared with the alternatives.”
Alexander says this does not encourage him to write in terms of rising prices; “not with the unemployment rate set to soar.”
But it appears increasingly that the market is “clearing” more easily and it is becoming appropriate to speak in terms of turnover having passed its weakest point.
What will be interesting, he says, is the impact later this year and through 2010 of an expected surge in net immigration and worsening housing shortage due to the construction collapse.