OPINION: Housing off political radar

OPINION: The 2025 Budget barely makes mention of residential housing, which suggest that as a political issue it has fallen off the radar of decision makers.    

And well it might, as housing from the perspective of price, availability and mortgage interest rates have been remarkably stable for some time.

In fact, you have to dig into the Budget support papers produced by Treasury to get a feel for where the official position is at as to where the housing market is heading (page 24).   

These support papers make a strong case that the housing market is facing a sustained period of modest price growth.

Treasury’s comments and its figures, based on Cotality’s House Price Index, forecast’s that while over the next 12 months price growth will be minimal (0.3%), but for the four years after this - through to 2029 – the yearly price growth year-on-year will be in excess of 5%.

While Treasury’s forecast  is no guarantee of what will actually occur, it is nevertheless an encouraging signal that the current flat period will soon be in the past.

A recovery of prices at this pace will be welcomed news to existing homeowners after four years of tepid price movements but it is probably not the news that first-time buyers want to hear.

It might also cause those who are waiting for ‘the right moment to act’ to reach the conclusion that the right moment may well be in the next 12 months.

Treasury’s supporting documentation also makes comments about house building activity.

After noting that the recent ‘weak’ housing market had led to ‘large falls’ in residential construction in the last quarter of 2024, and that the number of annual building consents remains ‘flat’, it saw residential investment recovering in the second half of this year, and predicted that as house prices grow ‘this will encourage new building activity’.

It says, ‘residential building consent issuance has started to pick up in recent months and will translate to a pickup in construction activity in the months ahead’.

A decade ago, a key talking point around housing was about the lack of investment in new housing stock and that this had led to the country having insufficient housing to meet the country’s growing population.

A figure often bandied about was that Auckland was 30,000 homes short of what was needed to house its growing population.

That particular issue is fast disappearing and presently the number of homes for sale in Auckland is double what it was 10 years ago.

Some commentators see the number of homes for sale as a negative, and as an indicator that the market is just drifting aimlessly. Whereas I see it as a positive that gives buyers an excellent range of options. It also ensures vendors invest in enhancing their properties before bringing them to market.

The housing market from the perspective of sales number is far from drifting. For example, our sales this year (January to May) are 19% higher that they were for the same five months last year, and 65% higher than they were in 2023.

In fact, we sold more homes in May this year than we have in the month of May for four years.

The housing market is definitely in recovery mode. The first signs of this are showing up in sales turnover and then will come the increase in values.