Editorial: Signs of spring in property market but double-edged sword for first-home buyers

The housing market has a slight spring in its step. Photo / Ted Baghurst

EDITORIAL

Spring has noticeably sprung, bringing with it the first buds of promise in a largely dormant property market.

Real Estate Institute of New Zealand data released this week showed August sales were up nationwide - particularly noticeable in Auckland, Marlborough and Canterbury.

It is certainly too early to be calling it a rebound. But bank economists, while remaining cautious, are detecting signs of growth, if not strength.

Prices remain sluggish amid still-low listing numbers, pre-election jitters and overall economic conditions, including high interest rates and cost-of-living pressures, but there is a noticeable sense of anticipation building.

Commentators feel we have seen the bottom of the market.

There will be no small measure of relief for homeowners, particularly those who bought at the top of the market and are now facing paying off mortgages amid stubbornly high interest rates.

But the spectre of any significant market bounce-back will come as a double-edged sword for those still desperately saving to buy their first home.

For so many people, the market remains deeply unaffordable, keeping the dream of home ownership just that.

The pace of new building has been a constraint, not helped by the collapse of some businesses in the residential construction sector, amid soaring costs.

Add in increased migration - a record net gain of 96,200 people in the July 2023 year, according to Stats NZ data released - and it will be even harder for those buyers to get a foothold.

And of course those same pressures flow through to the rental market, too, pushing prices up and making those properties equally unaffordable for many.

Although those paying off their mortgages on high interest rates have done it tough, trying to keep their necks above water and not knowing when the pain will end for them, it has been a boon at last for savers, who have finally been able to earn extra on their funds that had previously grown little more than dust - or been depleted.

It is a fine balance indeed.

New Zealand desperately needs more migrants to fill vital skills shortages and contribute to economic growth.

We need evidence of prosperity, including a lift in the property market, to inspire consumer confidence and spending, business confidence and employment, and further growth.

Post-Covid, we need a psychological boost, too.

And somehow, we need to try to ensure that everyone gets a part of any lift, that we really do build back better, fairly, and mindfully, for there are any number of pressing challenges facing New Zealand in the current global climate.

It is likely there will still be hesitancy ahead of the October 14 election as individuals and the markets consider what the parties’ policies and promises might mean. Only when there is more certainty are we likely to know whether the housing market is only slowly stirring or racing back into life.

Nevertheless, this next month is likely to be telling.