The recent softening of Auckland house prices is probably just a temporary lull, according to BNZ chief economist Tony Alexander.
In his latest Weekly Overview newsletter Alexander said Auckland house prices were probably still rising, but at a slower rate than previously.
Some recent softness in the market was due to Chinese buyers struggling to get funds out of China and investors looking outside of Auckland for lower priced properties elsewhere, he said.
That had created a small opportunity for Auckland buyers to be a bit more choosy.
“Auckland buyers face a small window to pick and choose from stock on offer to a slightly better degree than a few months ago,” he said.
However that probably wouldn’t last long because Auckland’s housing shortage was continuing to get worse due to increasing migration and not enough new homes being built.
” Auckland gained a net migration in the year [to October] of 38,000 people, a population boost of around 2.5%,” he said.
“That means the need for an an extra 12,700 houses using Auckland’s three per house occupancy rate.
“Consents in the past year have totaled 8700. Auckland’s housing shortage continues to get worse and worse…”
With interest rates still low, that meant prices would eventually start rising again, he said.
It would also lead to higher density housing in many Auckland suburbs.
“Auckland has no option other than to intensify given the lack of funds to allow development of an efficient transport system which will allow people to live a long way from their places of work,” he said.
You can read the full Weekly Overview by clicking on this link.