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Key influencers of buyer confidence: what they mean for you.

By Mike Henderson / December 13, 2016 / Share:

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Buyer confidence is influenced by a number of external factors. By understanding the wider forces that shape the property market, you can make well-informed decisions.

If you want to understand the current trends on the NZ property market, click here to download our eBook "How to get ready to sell your house" and become more confident in making decisions for your own house sale or hunt.

By understanding market trends, you can avoid some of the common pitfalls associated with purchasing property.

Awareness of these trends will help you to save money, and means that you can choose the right time to sell or buy property- instead of being forced to sell for financial or health reasons, or getting stuck with a property that is hard to sell.

It doesn’t matter if you’re a newbie to the property market or an experienced mogul: the key factors which influence buyer confidence remain the same.

In this article, we’ll look at how migration, employment rates, interest rates and mortgage debt, and regional building consents affect the confidence of buyers.

Migration

  • Nationwide, New Zealand’s population is growing strongly. Half of this growth is in Auckland. Migration is a strong contributor to population growth.
  • In the last quarter, it appeared that net migration had peaked and was beginning to ease off. Recent months have seen an increase in net migration, driven by an increase in arrivals and static departures.
  • It was expected that foreign students in New Zealand would leave once their studies were complete. This has not yet happened.
  • A net gain of Kiwis arriving from Australia is contributing to the overall increase in migration. It is expected that overall net migration will drop once we return to the long-term norm of Kiwis moving to Australia for work and lifetyle opportunities.

Employment

  • A strong labour market leads to increased house sales. Both full-time and part-time employment have increased. This strengthening labour market encourages people into work, which increases the participation rate.
  • Unemployment is now at 4.9%, the lowest since 2008.
  • The labour market has improved, but this has not flowed through into wage increases yet.

Interest rates and mortgage debt

  • In November, the Reserve Bank dropped the OCR to a record low of 1.75%.
  • Retail mortgage rates did not decrease in line with this. Low interest rates means that banks are struggling to attract local deposits, which means they need to look offshore for money, which is becoming increasingly expensive.
  • Despite the OCR potentially dropping further, retail mortgage interest rates are potentially as low as they can get, and will likely begin to creep up slowly.
  • A return to higher interest rates is unlikely, which means that for several years, the current high levels of mortgage debt remain relatively manageable.

Regional building consents

  • It’s boom time for building consents for new dwellings. Levels continue to increase in Auckland, and are heading towards level as the previous building boom in the early 2000’s.
  • There has also been a marked increase in new building consents across the rest of the country, in response to population pressure and strong economic conditions.
  • Canterbury will see a slow wind-down as the focus shifts to commercial buildings.
  • So what does all of this mean for you, if you’re thinking of selling or have already made the decision to sell?
  • The increase in consent activity across the country means that the potential gap between population and housing is closing, but there is still a long way to go to ease the shortage.
  • The recent ANZ – Roy Morgan Consumer Confidence survey showeed an optimistic market: buyer confidence in New Zealand has continued to increase and is now sitting at its highest level since early 2015.
  • However, this survey was taken before the earthquakes struck New Zealand in November 2016, and along with Trump’s election victory, it is safe to say that volatility will be the flavour of the upcoming months.

To learn more about selling your property, click here to download our free eBook, How to get ready to sell your house

 

Topics: Property News