A former member of the Reserve Bank’s Monetary Policy Committee is questioning wide-spread expectations that interest rates will remain low.
Rodney Dickens, managing director of Strategic Risk Analysis, writes in his company’s newsletter that the common view of economic forecasters that rates won’t rise any time soon any is “off the mark”.
Dickens writes that the odds are high the current housing boom will be “undermined by rising interest rates”.
It’s the first hint of change among professional watchers of the money markets, and something those taking out large mortgages may need to consider.
Borrowers have become accustom to interest rates at historic lows of around 5 per cent, but if they were to rise to 7, 8 or 9 per cent within a year or two, then the impact of higher loan repayments may be hard to swallow.
Low levels of housing stock in some regions of New Zealand are continuing to benefit sellers, according to figures released by realestate.co.nz.
Its CEO, Brendon Skipper, says that with the exception of Auckland, there has been a gradual decline of housing stock over and above the typical midwinter seasonal lull.
This, says Skipper, has resulted in higher asking prices, most notably in the Coromandel, where the region had only 141 new listings and hit an average asking price of $636,297 — an all-time high for the region.
Other regions that have seen significant rises in prices include Canterbury, Nelson & Bays, Bay of Plenty, Waikato and (all together now) Auckland.
With inventory levels continuing to fall, the property market remains a sellers’ market, says Skipper.
The latest BNZ confidence survey provides a glimpse of how estate agents feel. It surveyed 14,000 people working in different industries and got responses from 570. The big take-away from those working in real estate seems to be a lack of listings across the board.
In Manukau listings are said to be “at reasonable levels”. On the other side of town in Rodney it’s reported that “very few properties” are being listed.
In Auckland Central, the slowdown continues in the $2 million-plus arena, with one agent saying “we have had a quiet two weeks where it seemed people were holding back, but in the last week we seemed to have gained a bit more momentum”.
Another says the market is “very flat” and and a Royal Oak agent says a lack of listings is frustrating buyers.
Rate of price rises slow
Auckland house prices continued to rise in August but the rate of increase is slowing, says real estate firm Barfoot & Thompson.
The average sales price at the firm in August was $906,560. Though this was up 4.5 per cent on July, it was up only 2.6 per cent on the average price over the previous three months.