Property market sedate but warming up
The property market is warming up along with the weather in time for Christmas so 2010 should begin on a strong note for the real estate industry.
According to the latest property market report from the National Bank, the improving market can be credited to policy stimulus and migration trends.
The last net migration figures for August 2009 show that arrivals exceeded departures by 1,610. That puts the net migration gain for the twelve months to August 2009 at 15,642.
“Low levels of New Zealanders choosing to depart, combined with a recovery in the number of permanent arrivals, are the key drivers of the net migration gains,” the National Bank said in its report.
With the volume of residential construction work reducing by 6.5% in the June quarter, the sector has declined for the seventh consecutive sector. “A touch of frost remains around the building sites,” the report put it.
Analysing Real Estate Institute of New Zealand house sales figure data, the National Bank report said that while the number of houses sold fell 1.9% in August, this was up 40% on the slump of the same time in 2008.
The number of days it takes to sell each house fell to an average of 33. “[This] ensures solid bidding for good quality stock on offer,” the report said.
Mortgage lending rose by 0.3% in the month of July 2009, where the previous month it rose 0.2% and the month before that by 0.4%.
“It’s still pretty sedate and hardly indicates a rapid turn. In many ways it looks at odds with increasing euphoria and perception towards the housing market.”
Residential building consents in July were up 5% but commercial consents are not looking as positive.
“With residential investment set to begin to recover later this year but non-residential or commercial construction looking weaker, the net effect is that the construction industry will remain subdued for a time yet,” the report said.
While credit growth stays low, de-leveraging will remain dominant according to the National Bank report.
“After a prolonged recession, stimulating the interest rate sensitive sectors, and seeing a subsequent response, is consistent with a conventional business cycle.”