Steve Hart: A change is in the air

On top of that, some economists reckon the official cash rate will go up this year. Photo / 123RF

A downturn in net migration, changes to tax rules for property investors and closer scrutiny of rental accommodation will all contribute to a changing landscape for the real estate market this year, says Nick Goodall, head of research at CoreLogic.

On top of that, some economists reckon the official cash rate (the Reserve Bank set it at 1.75 per cent in November 2016) will go up this year.

The Healthy Homes Guarantee Bill means some landlords will need to improve their properties (some may sell rather than spend on them), and foreign buyers could soon be effectively banned from buying existing property in New Zealand.

"So, plenty of macro-economic factors pointing to property demand remaining relatively constrained in 2018," says Goodall. "But of course significant constraints on the construction industry remain, so supply will still lag."

Goodall says there are ambitious Government targets to improve the overall supply of housing, particularly in Auckland. But nothing will change over night.

Research released by CoreLogic in the middle of last year showed the increase in stock (6000 in 2016) is far behind those being consented (9000). This is partly because the demolition of old properties isn't taken into account.

"So while building consents provide a high level health check of the construction industry, and they are trending upwards, they're not always telling the whole story," says Goodall.

With regard to prices, he says values are likely to remain relatively flat for most of the year in Auckland; "Barring a local or global economic shock".

"With more properties available, the fear of missing out has been removed, taking with it the previous upward price pressure.

"People can once again save faster than the growth in property values (so waiting can actually pay off), plus it's harder to secure funding ... all adding up to constrained demand," says Goodall.

"The story is slightly different outside Auckland though, particularly in Wellington and Dunedin where there remains a shortage of available listings and where the growth phase took a little longer to kick in than places like Hamilton and Tauranga."