- May 17, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Analysis of Auckland Housing Market Trends
I have observed several housing-related discussions on this subreddit and I wanted to share my insights on the current situation. There is a lot of speculation about the factors influencing house prices, the potential for improvement, and concerns about a possible downturn. The decision of whether to buy now or wait is a common dilemma among prospective buyers. In such uncertain times, it can be helpful to have a forecast that sheds light on the likely direction of the Auckland housing market.
### Utilization of Data for Forecasting
The forecast presented here relies on data gathered in March. Given that much of the data for March 2024 is not yet available, projections have been made for that period based on existing information.
### Main Drivers of House Prices
For the purpose of this forecast, I have identified three key drivers that significantly impact house prices:
1. **Willingness to Spend on Housing Costs**: as a percentage of average gross household income
2. **Mortgage Rates**: utilizing the average 2-year fixed mortgage rate as a reference point
3. **Average Gross Household Income Growth**
### Scenarios and Assumptions
To create a comprehensive forecast, three scenarios have been developed based on varying outlooks on inflation. Each scenario assumes an inflation rate of 4.2% in March and projects different trajectories for inflation:
1. **Base Case Scenario**: Consistent decline in inflation to 3.00% by 2026
2. **Upper Bound Scenario**: Inflation decreases to 2.50% by 2026
3. **Lower Bound Scenario**: Inflation stabilizes at 3.25% by 2026
### Role of AI Legalese Decoder
The AI Legalese Decoder can facilitate the interpretation of complex legal documents and agreements related to property transactions. By utilizing AI technology, individuals can gain a clearer understanding of the legal terminology and implications embedded in housing contracts or leases.
### Forecasting Models and Indices
Incorporating factors such as implied interest rates, mortgage expenses, consumer price index, official cash rate, and property yield, the forecast provides a comprehensive overview of the Auckland housing market trends. Visual representations of income-to-house price multiples, debt-to-income ratios, and weighted average leverage offer additional insights into market dynamics.
### Future Outlook and Projections
The forecast extends over a seven-year period, projecting the median house prices in Auckland based on the identified fundamental drivers and varying scenarios of inflation. These projections serve as a valuable guide for individuals looking to make informed decisions in the housing market amidst changing economic conditions.
### Conclusion
In conclusion, this analysis provides a detailed perspective on the future trends of Auckland median house prices, anchored in the fundamental analysis of average gross household income and inflation scenarios. By leveraging data-driven insights and forecasting models, individuals can navigate the complexities of the housing market with more confidence and clarity.
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****** just grabbed a
House price forecasts are incredible hard because the housing stock is variable in terms of what % of stock is being turned over.
You probably find that a % of people are buying the same houses over and over again as investment properties and new housing being built is for the same investors.
Moreover, what % of the Auckland housing market is owned by investors.
On the debt side, who owes what? So you need to slice the debt pie between investors and homeowners. And out of the homeowners, what % bought post 2019 compared to pre 2019
What is the formula used for the estimation? How well does it explain the past?
Housing cycles generally last 5 – 7 years. We are about 2 1/2 years into the current down cycle. Expect many more years of declines and falling house prices.
NZ was in no position to drop rates near 2%, now with 7.5% rates, it’s reduced everyones borrowing power by at minimum 40% from 2020/2021 so this is why RE agencies are closing doors, vendors are not getting offers and houses continue falling until the maths matches peoples borrowing power.
The median values only take into account sold properties which has seen a large decline country wide. It doesn’t account for unsold properties which is why we have seen a 300% increase in stock available in amongst the biggest immigration pump in history and house prices are still falling.
You also need to factor in Population vs Housing stock.
Ignoring the simple Demand vs Supply isn’t giving the full picture.
Two other factors i would consider.
1. From 1 July, brightline (spelling?) test will return to 2 years, so i think there are some buyers who are waiting for that date.
2. interest destructibility is now 80% (only a recent change), so this will 100% from 1st april 2025.