“The Dynamic Housing Market: Insights and Analysis from a leading economist”
As I delve into the captivating world of our country’s economic state, I can’t help but confess that my particular interest gravitates towards the thrilling realm of the housing sector, which aligns seamlessly with my background in Property Management. Staying well informed about the market is crucial, and I do enjoy perusing the diverse viewpoints of economists. Amongst them there is one economist I follow closely Tony Alexander. As a former chief economist at BNZ for a staggering 25 years, before embarking on his solo journey as an independent economist since 2019. He distributes his” Tony's View” publication on a weekly basis and you can read about his insightful weekly column on One Roof. He conducts biannual surveys that provide a real insiders perspective within the New Zealand industry with a special focus on the dynamic housing market.
In his latest issue he talks about the housing market primer and examines the current state of The Real Estate market and the factors influencing its trajectory. The data suggest that the market may be bottoming out, as both sales and average prices have shown signs of stabilizing in the past 2-3 months. Several contributing factors, such as eased lending criteria by banks, rising wages, increasing rents, and a net migration boom, indicate that the downward leg of the housing cycle is nearing its end. Tony cautions against relying solely on short term predictions for house pricing changes and emphasises the long-term strategies and maintaining acceptable cashflows. While predictions for average house price increases are provided for the current year and 2024, economists acknowledge the difficulty in accurately forecasting such changes.
The publication presents a comprehensive analysis of the factors contributing to the rise inhouse prices additionally he delves into the factors that may restrain the pace of price rises such as rising unemployment and only gradual decline in interest rates. Despite these trends, it highlights housing affordability in New Zealand may not significantly improve due to various challenges, such as increasing construction costs, higher standards for new houses, and limited land availability near city centres. Furthermore, it evaluates the potential outperformance of certain regions in the current housing cycle noting that areas experiencing high population growth are likely to see higher price rises. While Auckland is projected to outperform based on historical trends, he still acknowledges the uncertainty of short-term forecasts.
Overall, “Tony's View” publication encapsulates the essence of his expertise and offers valuable insights into the dynamics of the Real Estate Market, guiding individuals in making informed decisions and understanding the complexities of the ever-evolving housing landscape. An excerpt from his newsletter
‘“There may well be 7–10-year cycles in place for large parts of the country. But all that these “calculations" are really saying is this one simple thing when it comes to growing your wealth from holding housing assets. You hold for as long a period of time as possible and arrange your cash flow affairs with just one objective in mind – not being forced to sell when the market might be weak. Property investing is actually very easy. Buy. Maintain acceptable cash flows. Focus on your personal abilities, family goals etc. Hold as long as possible.”
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