In the coming 12 months some 90,000 to 100,000 couples or individuals nationally will buy a residential property, the majority for their own personal use.
The majority will also simultaneously be sellers.
Naturally, all will be particularly keen to understand what will happen to house prices over the next year as residential property for most remains their largest single asset.
They feel that having found the right property for sale but getting their timing wrong has the potential to significantly impact their wealth.
Many more will want to get into the market but will find their entry blocked by existing regulations, inability to raise the funds necessary or by the property they want being simply too expensive for them.
If the market changes, and prices fall it could bring their dreams once step closer to reality.
In blunt terms, all want an answer to the question: Have NZ property prices reached the tipping point?
And in particular they will look to what is happening to the Auckland market.
It is here that prices first started to rise, and in the last quarter of 2016 there were signs that prices had at least stopped increasing if not fallen back modestly.
If prices were to firm or fall in Auckland, it's a not unreasonable assumption that other markets will follow.
As people seek to get a feel for future price direction they will find that there is little to help them.
Few forecasts spot on
There are certainly plenty of strong opinions out there, with positions being taken by the Reserve Bank, politicians, economists, commentators and those of us involved in the property market.
All argue persuasively for their point of view while adding words of caution about their predictions might not come to pass.
And with good reason. Auckland at least has experienced 9 years of year-on-year price increases, and over that time few have got their forecasting spot on.
My position remains that until data covering March sales is released, which is likely to be in early April, it is unlikely that a firm trend will be established.
The market is so disjointed in January and February that it is not wise to read too much into the numbers.
For those that want an in-depth, reasoned debate about the issues affecting house prices in the coming 12 months – and some reasonably strong position taking – they might want to refer to an article by Nick Goodall of CoreLogic that appeared on Stuff in December.
It’s not a quick read, but I certainly believe it is worth while for those that are looking for a balanced, independent perspective.
Market more than likely slowing than at tipping point
My overriding take from the material in the article is that as long as attitudes remain positive to drivers such as job security and the economy, interest rates remain low and the population continues to increase, the market is not at the tipping point, but rather at the slowing point.
If that's the case, and people are looking to buy a home for family use, have a reasonable time horizon of say 7 years for ownership, and have the financial capability to see their mortgage repayments increase modestly over the next 12 months, then there is little reason to not have confidence to move forward with their plans.
History on Aucklander's side
Those buying into the Auckland market also have history on their side.
When the New Zealand residential housing market experienced the last downturn in prices in 2007 from a combination of local economic downturn and the onset of the global financial crisis, the Auckland average selling price decline by 5%. Within two years prices had recovered to their pre-downturn level.
While past trading patterns are no guarantee as to what will occur in the future.
It’s equally true that if prices were to fall by 8% tomorrow, those that purchased a property 12 months ago would still be in the same relative position as they were at the time of purchase.
Trying to pick the peak and troughs of any market is littered with so many unpredictable factors that hitting the sweet spot is virtually impossible.
Managing Director, Barfoot & Thompson