Happy New Year. I am sure you have begun the year with excellent intentions as I have (and as I do every year) and are hoping that this time you turn your goals into reality while kicking those bad habits into the past forever.
We are so fortunate that we get to move into the new year in summer when anything and everything seems possible and when most of us have enjoyed some holidays. It certainly makes it easier to set goals and prepare action plans for the year.
For everyone who has property in their goals in any guise the first question which always comes to mind is “What is going to happen in the Auckland market this year?”
Last year ended quietly for the Auckland property market with prices levelling out and the number of properties for sale increasing. The impact of the lending criteria changes and the reduction in bank lending hit investors hard just as the Reserve Bank intended but given time I am sure that they will bounce back as they have through previous changes.
An article in the New Zealand Herald examined what is likely to happen to house prices by interviewing economists and the most interesting aspect for me was that they all agreed that there have been no changes to the fundamentals that are driving the market so it is likely that it will continue in the same trend that we saw before these limitations were put in place. In other words; they don’t see it as a bubble which could burst but rather as a reflection of the way in which Auckland has become an international city.
Of course this doesn’t mean that everyone will be happy with the way the market is developing. For investors the extremely low returns they are getting for their funds invested in Auckland housing may lead many to look elsewhere. The problem is they are often trying to find that elusive part of New Zealand where they can get a higher yield as well as capital growth.
And first-home buyers will continue to struggle to be able to buy especially in the suburbs they really want to live in. The move into becoming a property owner in Auckland does not look as if it is going to get any easier and could become even more difficult if interest rates begin to rise later in the year.
I think that the Auckland market will offer very different challenges this year depending on your life stage and financial goals. Retiring baby boomers looking for higher income may see that having so much money invested in Auckland property is not giving them the lifestyle they want and may consider other locations and investments. Younger families may also see opportunities in other parts of New Zealand where a first home is much more affordable.
But Auckland will keep growing and the increasing number of people will continue to keep driving the need for more housing so the challenges of buying property will be with us again in 2017.
Just remember that whatever your property goals are for this year your action plan to achieve them will need to contain difficult strategies and painful compromises but in 20 years’ time you will be glad you had goals and that you followed through to achieve them – of that I am very sure.
Advising Auckland property buyers