Susan Edmunds: Five reasons the housing market is picking up again

For the past 18 months, the housing market has been firmly in the doldrums.

Since the peak in late 2021, prices have fallen 16.1% according to Real Estate figures and turnover is about half what it was at the end of 2020.

But there are increasing signs that things have turned. This week, Kiwibank economists said it looked as though May was the trough for the housing market.

So what’s prompted the change?

Migration

This is the big one. Forecasters expect that, some time over the next month or so, New Zealand will clock up 100,000 net migrants into the country.

That is likely to mean a need for 40,000 to 50,000 more houses, Kiwibank chief economist Jarrod Kerr says.

Some migrants will rent rather than buy their homes, but that extra rental demand can also boost the property market.

Looser credit criteria

Corelogic chief property economist Kelvin Davidson said it was now easier to get a mortgage, which was helping prices.

From June 1, banks were allowed to lend 5% of their new loans to investor borrowers with 35% deposits, compared to 40% previously.

They were also allowed to lend 15% of new loans to owner-occupiers with 20%, from 10% previously.

Davidson said that, combined with an adjustment of the Credit Contracts and Consumer Finance Act (CCCFA) rules meant an increase in activity.

Interest rates possibly peaking

Interest rates are higher than they’ve been in years, but the fact they probably won’t get a lot higher is drawing people back in, Davidson said.

“It’s a bit of a nuanced one because interest rates are still high, but it’s more people thinking they’re not going to get worse. They can quantify how things look in a worst case. If I’m comfortable with that, given I’ve still got a job, I can make some decisions. It’s not just that they’re peaking, there’s a psychological element.”

Lack of new listings

The number of people wanting to put their houses on the market has dropped a lot over the past year and hit record lows in the middle of this year.

Realestate.co.nz spokesperson Vanessa Williams said there had been a number of consecutive months this year when listing numbers were down in double-digit percentages compared to the year before.

“The lack of listings in combination with a rise in sales means the stock on the market is going down,” Davidson said. “The buyers that are out there, that have got finance, have reduced choice on the market.”

That means that people have to compete more for the desirable places.

Strong labour market

The labour market has been resilient to the economic downturn. The unemployment rate remains at 3.6%. Davidson said that had limited the extent of the downturn, because few people were forced to sell, and

SDGs, Targets, and Indicators Analysis

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 1: No Poverty
• SDG 8: Decent Work and Economic Growth
• SDG 10: Reduced Inequalities
• SDG 11: Sustainable Cities and Communities

The article discusses the housing market and its impact on poverty, economic growth, inequalities, and urban development, which are all relevant to the mentioned SDGs.

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 1.4: By 2030, ensure that all men and women, in particular, the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership, and control over land and other forms of property.
• SDG 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries.
• SDG 10.2: By 2030, empower and promote the social, economic, and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.
• SDG 11.1: By 2030, ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums.

These targets address the issues of equal access to economic resources, economic growth, social inclusion, and affordable housing mentioned in the article.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Net migration into the country (indicator for SDG 1.4)
• Credit criteria for mortgage lending (indicator for SDG 8.1)
• Unemployment rate (indicator for SDG 8.1)
• Number of new housing listings (indicator for SDG 11.1)

These indicators can be used to measure progress towards the identified targets, as they reflect the changes in economic resources, economic growth, social inclusion, and access to affordable housing.

SDGs, Targets, and Indicators Table

Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.

Source: stuff.co.nz

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