The housing market has been record-breaking for the majority of 2021. The sellers have been the winners so far in the post-Covid housing market game, which is most likely to change in the coming months.
The government has been working hard to resolve the housing crisis with their policy changes and the recently announced Budget reveals similar measures of helping the market obtain sustainability.
The Budget declares, “To support our ongoing rebuild from COVID-19, we have funded the $3.8 billion Housing Acceleration Fund from the COVID-19 Response and Recovery Fund. Just as we have stamped out community spread and supported businesses and workers, it is important that we continue to deliver on key initiatives that support New Zealand’s economic recovery, rebuild, and long-term wellbeing.”
The Housing Acceleration Fund will help New Zealand build more houses quickly by providing an Infrastructure fund to the private sector in locations facing the highest housing supply and affordability challenges. This shows the government’s effort to help with the affordability and supply crisis which shows potential for first home buyers to re-enter the market.
In the Budget’s economic outlook, “the Treasury forecast annual house price growth to peak at 17.3 percent in the June 2021 quarter, and ease to 0.9 percent by the June 2022 quarter.”
Wendy Alexander, Acting Chief Executive at REINZ says “As we head further into the cooler months of the year and the second tranche of LVRs comes into effect, we would expect to see further stabilisation of the market in the coming months – as long as we see a solid level of new listings come to the market,”.
Homeowners have been buoyed by rising house values in recent years, and Treasury has estimated an increase in prices of 17.3 percent in 2021. However, the price growth has been forecasted to crash to 0.9 percent in 2022, due to the Government’s announced changes to the bright-line test and interest deductibility on rental properties.
Overall, there are indications that First Home Buyers (FHB) are competing to keep up with towering market prices. But the Government has of course stepped in to try and help to potentially free up opportunities for FHBs to ingress into existing properties with less competition from leveraged investors than before.
The new Budget gives hope to deaccelerate the exponential increase we have witnessed over last year and helps in increasing the momentum of new builds.
However, it is important to remember that New Zealand’s border have been closed for the past many months due to which the employers are facing a shortage of labour. There is hope as once the pandemic is under control and the migration is again permitted, there will be enough potential supply of new housing stock entering the market. Although, if not the case, the current demand that is exceeding the supply may further give a price boost to the listings at a faster pace.
For professional mortgage & insurance advice, speak to our experienced advisers for a free consultation and no-obligation quote today. Contact the team at Professional Financial Solutions on 09 846 9934 or on our website – www.professionalfinancial.co.nz