City Sales’ Scott Dunn wants people to be aware of, and differentiate between, the housing and apartment markets. The apartment market is driven by investor sentiment, and housing by emotional/occupiers.
As reported last month, the recent surge in house prices is expected to come to an abrupt halt as the Reserve Bank signals it expects a series of interest rate increases from the middle of next year. Although he said low mortgage rates were likely to continue to encourage buyers for some time yet, governor Adrian Orr warned borrowers to consider how higher might feel, with the expected path higher over the next few years.
The report said that the path for the OCR, which has a significant impact on business and consumer borrowing rates, was significantly steeper than most economists had been expecting. Rising mortgage costs, along with a series of measures by the Government to discourage housing investors and increase supply, are now expected to see the housing market cool almost immediately, governor Adrian Orr said.
Having risen by close to 30 per cent over the previous 12 months, the Reserve Bank sees house price increases falling to zero for a year starting in June, before resuming a gradual increase. There’s been a whole lot of constraints, including border restrictions, but things should ease up providing a bit more supply through in due course.
Dunn says he is worried this will have an unbalanced effect, and impact the apartment market more so than housing. As he says, “I am worried that investors who provide the accommodation for Kiwi renters are being overly attacked/punished”.
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