Property Market: Are we at the turning point?

The Auckland property market is at a crossroads, and it’s got everyone wondering: What’s next for property prices? With the latest inflation figures set to be announced this week and a mix of factors in play, it’s time to weigh the arguments for and against Auckland property prices going up or down. Let’s dive into the discussion and explore what could shape the future of the market.

Arguments for Auckland Property Prices Going Up:

1. More People, More Demand: Auckland has been buzzing with population growth due to higher than anticipated net migration. With more people looking for a place to call home, the demand for housing keeps soaring. It’s basic supply and demand – limited housing availability combined with a growing population means prices are likely to rise for both rentals and house prices. 
2. Easy Money, Easier Loans: Banks have been getting friendlier with their mortgage lending policies. That means it’s becoming easier for aspiring homeowners to secure loans. Test rates may be high, with some banks testing applications at 9.5%, but many are lending more to first home buyers (with the banks pool of lending now allowed for up to 15% of borrowers with less than 20% deposit), and LVR restrictions loosened for investors, now only needing 35% deposit for investment properties. When money is more accessible, more people can jump into the property game, adding fuel to the price growth fire. So many buyers have been patiently waiting in the wings for the right opportunity to purchase but have been stuck between their borrowing ability and house prices. Now, with easing lending restrictions, the more borrowing ability they have and with house prices arguably under valued in Auckland, we could be at a turning point for faster than anticipated recovery in the property market.

Arguments against Auckland Property Prices Going Up:

1. The “I” Word: Inflation can be a game-changer. If the latest figures show a downward trend, it might be a sign of weaker economic growth and reduced consumer spending power. Although it’ll be news that we’ve all been waiting to hear, property prices could face headwinds, as buyers become more cautious and keep some out of the market through fear of  job losses, and whether we’re really out of the woods yet. However, if showing a downward trend, it could also be argued that the huge increases in the OCR we’ve been seeing (and now looking to have stopped at least for now) has worked to cool inflation down, so maybe we’ve seen the worst of interest rates and house price falls? 
2. Rate Hike Blues: Interest rates have been on the higher side, even though they seem to have hit their peak. Those lofty borrowing costs can put a damper on buyers’ plans and make it harder to afford a property. High rates might act as a speed bump on the road to price growth as people plan to wait for lower interest rates.

The future of Auckland’s property prices is an intriguing puzzle, with arguments on both sides. The interplay of high net migration and lenient mortgage lending policies may fuel demand and push prices higher. However, a potential downward trend in inflation and stubbornly high interest rates is an interesting mix that will only in time, will reveal how this will shape the property market. As it depends on how these factors play on people’s minds. Will they be optimistic or pessimistic about buying property now?

In the end, market predictions are no easy feat, and Auckland’s property market is no exception. Keep an eye on the inflation number announced tomorrow and you decide! 

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