Remuera Property Market - What will happen next?
This current cycle has seen most of us avidly interested in interest rates and unusually captivated by forecasts and economic predictions. In the middle winter, at the bottom of the property cycle, news of positive economic data is intoxicating. It’s easy to get carried away. Forecasters however are apt to point out that the unemployment rate, credit defaults, mortgagee sales and business liquidations are likely to continue to rise into next year alongside improved cost of living, growing business confidence and green shoots in the property market.
Let’s consider how the landscape may change in the year ahead. But first a snapshot of where we were in the middle of this year.
The following table shows buyer activity (sales volumes) and values relative to CV for the period April to June over the last 4 years in Remuera. April – June is chosen as it’s the period covered in this issue.
One well known economist has predicted (noting their prediction may be wrong), 1 year interest rates will fall to 6.5% by March 2025, continue declining gradually to 5.50% by March 2026, 5% by March 2027, eventually landing at around 4.5% in 2028. ANZ suggests 5.7% by June 2025. Clearly the situation is fluid. A lot can change in the months ahead. On balance however most forecasters see measured reductions and a long-term higher interest rate hovering around 4.5%. This suggests the property market will recover slowly.
The wild card is FOMO (Fear of Missing Out). In a rising market a tipping point comes when buyers who have previously missed out start paying more to secure their desired property. Once FOMO takes root prices rise – rapidly. To be clear, FOMO is pushing up prices in the
market today. However, it is property specific, not generalised across all market sectors.
Supply and demand also impact the pace of rising prices. There may be a temporary over supply once owners who have been holding off listing come to market. First movers may have the advantage. Timing will be important. Other factors which may affect prices included revisions to Auckland City Council CVs and potential changes to foreign investor rules.
Now is the time to understand how the market may move and plan the next phase of your property journey. Please feel free to reach out for further information and confidential discussion: lisa.macqueen@raywhite.com.
Lisa MacQueen
April - June 2024
Ray White Remuera | Megan Jaffe Real