Auckland's property market is enjoying a red-hot rebound, with the coronavirus looming as the most potent threat to derailing it. Photo / 123rf
Auckland's property market is enjoying a red-hot rebound, with the coronavirus looming as the most potent threat to derailing it. Photo / 123rf
The deadly coronavirus looms as the most potent threat to New Zealand's red-hot housing market heading into the election, a leading economist says.
But the virus could give property investors greater power to push back against unpopular law changes, former Bank of NZ economist Tony Alexander said.
He told guests at today's OneRoof Property Breakfast that China's economic slowdown from the virus had already hit Kiwi tourism operators and importers and exporters.
Alexander believed that politicians would now be loath to see those jitters spread into the housing market.
"All of the major parties now want house prices to rise this year," he said.
"I don't think you are going to see many people in the Government saying, 'Let's put in place a whole new range of measures that will cause investors to sell, get house prices down and make it more affordable for young people'.
"Maybe that gives a little bit of bargaining power to people in the property investment sector."
Auckland's property market is enjoying a red-hot rebound, with the coronavirus looming as the most potent threat to derailing it. Photo / 123rf
The warning came as pundits across the world scrambled to predict the virus' economic fallout.
Two cases have now been confirmed in New Zealand, while more than 90,000 people have contracted it worldwide and 3100 have died.
A report by news agency Bloomberg found new apartment sales in China fell 90 per cent during the first week of February compared to the same time last year. In the US, the Federal Reserve cuts its benchmark interest rate to counter the virus' economic threat.
Carmen Vicelich, founder of property analysts Valocity, told the OneRoof Property Breakfast she had recently been in Singapore and was shocked to see the financial powerhouse's streets empty.
The fallout had already led Stats NZ to estimate that New Zealand's exports to China had taken an up to $300 million hit over the past four weeks, while imports of phones, electronics and clothes were being delayed, hurting local businesses.
The housing industry could also be directly hit by rising building material costs if overseas production slowed.
Yet Vicelich and Alexander remained optimistic about the housing market. Alexander tipped prices to still rise by more than 5 per cent this year.
Martin Dunn, managing director of apartment seller City Sales, tipped market uncertainty from the virus to pass quickly, while Barfoot & Thompson reported its highest month of February house sales since 2015.
Growing economic effects from the coronavirus could spread to the housing market, leaving politicians fearing a slump ahead of the election, economist says. Photo / Getty Images
"Any signs that the virus might have on market activity is unlikely to appear before April's trading results," managing director Peter Thompson said.
OneRoof editor Owen Vaughan said it was important to look to underlying data in times of uncertainty rather than relying on hype.
One side benefit for property investors could also be that the Government was likely loath to see a drop in house prices, economist Alexander said.
Property investors had been angered at a proposed change to the Residential Tenancies Act that will prevent landlords from getting rid of tenants without reason.
They argued the law change would make it much harder for landlords to get rid of unsavoury renters, which would also affect neighbours of bad tenants who would have to put up with them for longer.
Many investors had threatened to sell their properties over the change, saying it could not only cost them more money but raise their stress levels.
Real Estate Institute chief executive Bindi Norwell said it was important to "try and keep an even keel".
"Making such significant changes to the housing market [such as removing the 90-day no-cause notice], while the wider economy is showing signs of fragility, particularly from a tourism, education and import/export perspective, may not be in the country's best interest," she said.
