The housing market in New Zealand is becoming increasingly under pressure after it was announced that property auction clearance rates had fallen sharply in Auckland, so where does the housing sector in the country have to go from here?
Despite certain estate agents’ attempts to calm the fears by claiming that the prices have remained firm, the growing concerns are certainly prominent across New Zealand, and 75% of the residential properties that went up for sale at auctions in Auckland have failed to sell over the past few weeks.
If house prices are remaining the same and not becoming too expensive, it is certainly worrying that so many homes are not selling, so what are the reasons that people are not buying into these properties?
“There’s a slowdown in the market” commented David Whitburn, the head of Auckland-based property developer Fuzo. “The North Shore and west Auckland are still reasonably good clearance rates, but some of the Auckland central rates are less than 25%.”
Whitburn has noticed the decline at first hand whilst working for Fuzo, and he seems to believe that the main factor behind the fall in property sales in New Zealand is the struggle for property investors to secure mortgage finance, which is caused by the current strict and stringent lending conditions within the sector.
With most of the New Zealand estate agents agreeing that house prices are not to blame for the decline of property auction clearance rates, it has even been suggested that the country may even see an outright fall in house prices due to the rise of interest rates and a possible global recession.
So will house prices fall? And would that improve the auction clearance rates? Only time will tell, but something needs to change if we are to see a significant improvement in NZ.