Most commentators have moved away from discussing how low the market might drop earlier in the year to now asking the rhetorical question, “how much higher will prices go?” While it has always been very difficult to answer either of those questions without the benefit of hindsight, we do know that the current conditions are very favorable if you are considering selling. Those on the buying side of the transaction should not despair, as we discuss in this document; there are many benefits to being a purchaser in today’s market as well.
Residential real estate has always been favored as an investment option in New Zealand, both for those looking at a rental portfolio and for those wanting to invest and live in their home at the same time. Typically, the market in this country has operated on a cyclical basis, although the current conditions make this much harder to predict.
There has been much media attention around house prices in New Zealand recently, and just as we have seen in rising markets in the past, this quickly translates into pressure on banks, the Government, and the Reserve Bank to either control prices or increase affordability through assistance to purchasers, particularly first-home buyers. We have seen this in recent weeks with the Finance Minister urging the Reserve Bank Governor to consider housing more strongly in monetary policy decisions and a public response from the Reserve Bank in return.