The market has continued to accelerate at a fairly quick rate of knots since May. The current average effective growth during this period is circa 25% pa.
Interestingly the volume between May 2019 to August 2019 has reduced by just under 10%, after a fairly stable period from the 2017. A fall off in volume like this can indicate a peaking market. However we are of the view that this is fundamentally due to reduced listings rather than buyers holding back from making choices. This reduced choice could be a contributing cause for some on the level of the increases since. It does not appear that supply related issues will get much better into the foreseeable future, therefore the only way to steady the market will be a drop off in demand, which appears unlikely. Given all of these factors an increasing pattern will likely continue for some time yet, however we will get to a perceived affordable limit eventually.
It would appear lower interest rates internationally are aiding in a strong/strengthening market. The current level of sale price increases does increase the risk of speculative pressure. It will be interesting to see how interest rates track long term as hot property markets will be a concern for Reserve banks.
We have been extremely busy with a full general revaluation season; Manawatu, Horowhenua & Wanganui. Both Manawatu and Horowhenua values are live with some significant increases for residential and lifestyle properties in these areas. We are headed to audit for Wanganui very soon, which also shows some significant increases in values from their previous base in 2016.
All eyes will be on the February 2020 sales statistics as this period is likely to be again a significant snapshot of potentially where the property market could head in 2020. We are likely to see the usual slight slowing of volume and sale price increases during December and January again.
*Sourced from QV’s Jason Hockley – Property Consultant, Email Update.
