OPINION: Belief In Housing Market Growth Well Founded

OPINION: The combined wisdom of the Reserve Bank, our major trading banks and independent economists is that on average house values will have risen by 6% to 7% by the end of the calendar year.

After three years of prices first falling, then remaining static, this will be welcome news to existing homeowners, and as the forecast becomes reality as we move through the year it is likely to lead to an even greater number of people deciding to move forward with their future housing intentions.

Not such good news for buyers, especially first-time buyers who are striving to achieve the required deposit and/or meet the relatively tough borrowing requirements that have been introduced in recent years.

There is some consolation for buyers, however, in that for the majority, even paying 7% more for a property in 2025 than they would have paid in 2024, is that they are still paying less than they would have in 2022.

A positive forecast as to where house prices are heading will also help to counter the negative news in store for many homeowners when they receive their new local authority valuations, which are likely to show a significant decline in value over those previously published.

While the new valuations will be the first time most homeowners will have written confirmation in the fall in value of their home, the reality is those involved in the buying and selling of residential property have been aware that present valuations are outdated and have instead been accessing real estate Aps that track house prices for a more realistic valuation.

Barring any unexpected major economic downturns, all the major players remain convinced that prices will increase this year. One well-known economist, Tony Alexander, in a well-reasoned article forecasting house price growth over the next 32 years settled on a yearly average increase of 6%.

It is the type of forecast that will give younger homeowners the confidence that investing in a home is both a good economic decision, as well as laying a solid foundation on which to build their family’s future.

The first signs that the housing market is moving from a buyer to seller’s market invariable surfaces in the numbers of homes being sold rather than in prices.

And that is precisely what is happening currently.

The Real Estate Institute reports that in the first two months of this year 10,061 were sold nationally, 8% more than in the first two months of 2024.

Our sales for the first two months of this year show an even greater increase, rising by nearly a quarter from 1137 to 1385.

Given the recent excellent economic news that the country’s economy unexpectedly grew during the fourth quarter of 2024, there is a greater chance than not that the latest upturn in housing sales is no ‘false dawn’ and that the continued confidence in the housing market shown by the Reserve Bank, the trading banks and most economists is well founded.