New Zealand Property Market Review 24th March 2023 by Core Logic New Zealand

New Zealand Housing Market: Update March 2023

A Year of Two Halves

Kelvin Davidson from Core Logic gives us his latest New Zealand housing market review.

Video Transcript:

Hi There, my name is Kelvin Davidson. I’m the Chief Property Economist at Core Logic, and over the next 30-35 minutes, I’m going to run through a presentation about the current context for the housing market. Where it currently stands, where it might be headed. Obviously, there’s always a lot of interest in what’s going on with housing, and hopefully, I can give you a bit of context on what we think about it and some of the bigger issues. I guess we’ve always got two sides to the coin in the housing market. At the moment, house prices are falling, so first-time buyers will be pretty pleased about that, but on the other hand, existing property owners would prefer if they stopped falling, I suspect. So, there are always different sides to it, and it’s a useful sort of context to keep in mind.

I’ll just start by sharing my screen so you can see the slides.

Okay, so for me, this slide really, I guess, gives away the game a little bit, but I think we’re looking at a year of two halves. Yes, we’re a few months into 2023 already, things have remained pretty soft, and I suspect they’re going to stay that way for the next three to six months potentially. But once we get into the second half of this year, I think there’s a case building for some slightly brighter times. That, again, depends on your perspective, but I think towards the end of the year, we should expect the downturn to come to an end. So, sales volumes may just start to improve a little bit and property values stop falling. They might not start rising again for a little while, but at least stop falling. For me, that’s what the second half of the year might hold – an improvement on sales and house prices finding their floor, but still some challenges to work through in the near term.

So, just a wee sort of agenda. There’s the Reserve Bank, which is a key player in the property market at the moment, has been really since COVID first hit, with interest rate cuts which pushed house prices up. Now, interest rate increases which have pushed house prices down. So, the Reserve Bank is still playing a pretty key role. I’ll look quickly at what’s been going on in the property market, around some of the key indicators, what credit conditions are looking like, as I say, I think the Reserve Bank is still a key player. Credit conditions are still a key driver for the market, and where to next.

So, just starting with that Reserve Bank perspective, the last official cash rate decision, which was a few weeks ago now to be fair, but they went for only a 0.5% rise, which was a little bit smaller than what had perhaps previously been expected. There was an idea they might push up by 0.75. In the event, they only went from 0.5. At that time, Cyclone Gabriel was obviously a huge factor and still is really. But, at the time, they just felt it was still too early to judge what that might mean for inflation and the economy. So, they decided to look through the effects of that and just push on with what they had previously said, which was, we still think inflation’s a concern, and we need to keep pushing up the official cash rate. So, inflation is definitely still a concern. We’ve got the next official cash rate decision coming up in early April, so there’s still a little bit of uncertainty about that. It looks like at the moment that the official cash rate will be pushed up again. Inflation is still definitely a concern for the Reserve Bank, but just this idea now that the peak for the official cash rate might not be 5.5% like was previously expected. You know, we’ve had a weaker GDP number come through lately. We might already be in recession, just some signs of inflation could well still be a concern, could still be at a peak, you know, potentially starting to slow down even if it’s still quite high. So, there’s just a sense now that the peak for the official cash rate might not need to be 5.5, and potentially it’s five percent or 5.25. And of course, with that 5.5% peak for the official cash rate having been priced into mortgage rates, there’s a chance now that actually mortgage rates could start to just sneak down a little bit as people reassess where that official cash rate needs to go. But there are still concerns out there. We’re in a recession. The unemployment rate’s expected to rise. House prices are expected to fall further, as you can see on this chart on the right-hand side here from the Reserve Bank. They’ve got a projection the house prices will fall sort of in that range of 20%. They’ve fallen 10% already, so a little bit to go yet.

Like I said, just the sense now that mortgage rates have peaked, depending on what duration you look at and whether you’re floating or fixed. But there’s a generalized peak for mortgage rates having been reached. So that’s reassuring on one hand for mortgage holders, that at least now they can quantify their worst-case scenario. Yes, mortgage rates are still high, but at least this might be as bad as it gets. It gives people some reassurance around their budgets. However, at the same time, I wouldn’t be thinking that mortgage rates are about to collapse because, as I said, the Reserve Bank is still pretty concerned about inflation. I don’t think they’re going to be cutting the official cash rate anytime soon. So there is a sense that mortgage rates, even if they’ve stopped rising, won’t suddenly start falling either. And yeah, it’s still expensive to be a new borrower and tough for those existing borrowers who are repricing from a previously lower interest rate onto a higher one in the next three to six months.

So, definitely Reserve Bank focus. I guess the key message here is that inflation is still an issue, and we’re going to see more official cash rate increases. But there’s just a sense that we’re at a little bit of a tipping point where perhaps the original projection for the peak official cash rate might prove to be a little bit over the top. It might seem a little bit lower than that peak.

And what about recent property performance? I mean, sales volumes are exceptionally low at the moment. This chart here shows your calendar year total sales across the New Zealand residential property market: less than 64,000 sales in 2022. You have to go back to 1983 to find a year where sales were lower than what they were in 2022. So we are running at very low levels, I suppose you could call it in some ways. I think really the only people who would be selling properties and are doing so out of necessity at the moment, like a job change, unfortunately, maybe a death or a divorce, something like that, as opposed to just testing the market.

You have to go back to 1983 to find a year where sales were lower than what they were in 2022.

KElvin Davidson – Core Logic

So, yeah, I know it’s not a choice thing at the moment. I suspect it’s mostly out of necessity. So, rock-bottom levels at the start of 2023, which isn’t on this chart, but January-February sales activity has been just a continuation of this very low, so pretty tough out there for real estate agents. Not getting many listings and not getting the sales through the door, so things are pretty quiet out there.

When you see property sales at a low level, you tend to see property prices pretty weak as well, and of course, that’s what we’re seeing at the moment. So, on our index on the left-hand side here, this is the average property values around the main centers definitely falling further. Auckland, Wellington, you can see they have had reasonably sharp falls in their property prices over the last 12 to 18 months, but it’s quite broad-based, it’s across all of the main centers. Christchurch, if anything, has held up better, and that was what people had anticipated, that better affordability would hold up Christchurch house prices or keep them more resilient than what we might see elsewhere around the country, and so far, that’s proved to be the case. We’ve had falls from the peak of 4 or 5 percent in Christchurch versus 20% in Wellington, so pretty different story depending on where you are, but the key thing is that the downturn is still quite broad-based, even if the falls are smaller in some parts of the country than others still fall.

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Just switching to the right-hand side here. This is breaking down National property values into sort of value bands, I guess you’d call it, so the upper quartile line there on the right-hand side is the top 25 percent of properties, the medians that middle reading for all properties, and the lower quartiles the bottom 25% by value. So you can see tentative evidence here that the upper end of the market has suffered a little bit more, peaked to trough or from the peak so far values in that upper quartile were down 11.5%, as opposed to 6.8 percent at that lower end of the market. So some signs that the upper end is just feeling a bit more pain than the lower end, but I wouldn’t go overboard about this, really. The falls are across the board again, whether it’s upper end or lower end. So, certainly one to keep an eye on, just the sense that the upper end might be doing a little bit worse, but certainly, you know, nothing to go overboard yet, I don’t think.

Just looking quickly at listings, so what’s going on in terms of the available property coming onto the market, and then what’s already on the market, what we’re seeing lately is that new property listings, the weekly flow of listings, is pretty subdued. So, people aren’t really listing, would-be sellers are just sitting tight instead of things uncertainty about, well, how long is it going to take me to sell? What sort of price am I going to get? I won’t bother, I’ll just, I just won’t list in the first place. Not really seeing many signs of investors selling off to any great degree either. So, that new listings flow is pretty quiet. However, we’ve just seen that sales activity at the other end of the pipeline is pretty quiet too. So, we don’t have much stock coming on, but you also don’t have much leaving either. So, that means that the meat in the middle, if you like, the total stock on the market, the total stock in property listed at any point in time is still quite high.

So, I’ve created a couple of charts here to illustrate. There, on the left-hand side, we’ve got the national listings total, that sort of pink line there, 2023. This is how they evolve through each month, each year. So take that darker blue line there, 2021. That’s how total listings moved through the months in 2021. Then you switch up to the purple line there, 2022. You can see that through last year, the total stock on the market progressively rose. And then, 2023, that peachy liner has kind of gone flat, but it’s at a higher level. So, basically, the stock coming on in terms of new listings has been offset, I guess, in some ways by the stock leaving at the other end of the pipeline through sales. Those two things have been low but broadly offsetting each other, and that’s left the total stock on the market at any point in time flat but reasonably elevated. So, you can see that peachy line there is above where it’s been the last couple of years, and we’re back to where we were in 2020. So, there is decent choice out there for buyers. They know that if they’ve got credit, if they’ve got the finance, they’ve got choice on their side.

Just in Auckland, by contrast, a little bit tighter in Auckland, not saying it’s tight by any means, but tighter. You know, it’s not as in favor of buyers as it might be nationally in terms of listings. So you can see the peachy line there, 2023 has been flat again, and yes, it’s higher than where it was in 2021, but below where it was in 2020 and below where it was this time last year. So, you know, if anything, listings have risen a bit but not that much, and they’re just sort of tracking sideways. So it’s not so much in favor of buyers in Auckland as it is nationally, but we’re still seeing prices fall. So I think it’s still probably call it a buyer’s market.

And what about some of these buyers? This is our bio classification series, which breaks down all of the transactions that are taking place in the market into buyer shares or market shares. So, this isn’t a number of purchases; this is percent share of purchases. On the left-hand side here, we’ve got the national chart. This is our bio classification, as I say, key line here is the red line, there, first-time buyers, 24-25% market share lately, which is pretty much as high as it’s ever been. So, first-time buyers, even though the number of deals is relatively low within that quiet market, first-time buyers have been holding on to a pretty decent market share, as I say, sort of 24-25% nationally. So, great for first-time buyers. You know, it’s been a falling market, so they’ve seen opportunities to make purchases using low deposit loans. That’s one way in that people are finding that they can use that allowance at the banks to get in with a low deposit. With your own KiwiSaver, that’s been a factor, the bank of mum and dad, I guess, a willingness to compromise on the property type. So, you know, maybe looking at townhouses more than standard loan dwellings, compromise on location, potentially moving out to the outskirts of an area into more provincial markets, I guess, and then commuting back in. So, these things have all been ways that the first-time buyers have been getting in.

By contrast, mortgaged investors, mortgage multiple property owners, there’s that lighter purple line there in contrast to first-time buyers, really quiet at the moment, so 20% market share for mortgaged investors. Now, you know, it’s still one every five deals; it’s going to a mortgage investor, but 20% is pretty low by their standards. So, it’s tough out there for investors to get those purchases to stack up. Like I said earlier, they’re not really selling existing investors; they’re not selling their portfolios. But they’re finding it harder to expand, or for a new investor to start a portfolio. So, 20% is quite low, and no surprises, so, if you’ve got a 40% deposit, you are looking at a low rental yield when you buy, you’re looking at a high mortgage rate, the cash top-ups to keep that property sustained will be quite large out of other income. So, that’s a deterrent. The tax system’s changed, you’ve got higher compliance costs. Returns on other assets have gone up, you know, you can get 5% in the bank now in term deposit. So, there’s less incentive, I guess, to look at property. Capital values falling, however, cash investors, cash multiple property owners that sort of Darker Blue Line, they’re 15% so actually cash buyers are

Still seeing opportunities out there, yes. They’re still looking at lower rental yields, but they don’t need to worry about that tax deductibility so much because they’re not paying interest anyway. They’re not worried about higher mortgage costs. Thus, they’re seeing opportunities. Yes, there are compliance costs and not much capital gain at the moment, but if they can get a good purchase price at the start, get a deal at the start, then it’s probably going to pay off. So, cash investors are definitely still seeing some value and perhaps snapping up some bargains here and there.

Just as an example at a regional level stat, I’ve got the Christchurch chart here on the right-hand side. And you know, similar message, Christchurch has been a first-home buyer’s market for quite a while, and that’s still the case now. 30% of transactions lately go into first-home buyers. so again, that affordability is still on Christchurch’s side. There’s a decent selection of stock, a range of stock available, and first-time buyers are finding ways into that Christchurch market. So interesting to see that it broadly fits with the national picture, but even more so in Christchurch.

Okay, so what about credit conditions? That’s where the market’s been. It’s still pretty restrained. Some groups are a little more active than others, but overall, it’s still quite quiet. I think for me, credit conditions are still a pretty big determinant of all of that.

Now, this chart has a couple of things on it. I mean, yes, mortgage rates, I think, have probably reached a generalized peak. If they haven’t already, that peak will be pretty close. But we’ve still got this repricing wave that people really talk about, and this is still a bit of an issue this year.

On the left-hand side here, we’ve got the breakdown of all mortgages across the country, existing loans, and the sort of loan terms they’re on. So that 49.6% there, so let’s call it 50%, of all mortgages currently out there, 50% are fixed but due to reprice within the next 12 months. So over the course of the next 12 months, the next year, 50% of current loans, fixed, then will need to be repriced. So we’ve still got this wave of loans coming through.

Now, 50% isn’t an abnormally high number. If you look back through that chart, that darker blue line there is always sort of 40 or 50%. Go back a couple of years, it was a lot higher than that. That was when this sort of repricing issue really came to the fore when that dark blue line there was up at 60 or 70%. But yeah, the banks have worked through that pretty successfully. Borrowers have worked through that pretty successfully, and we’re back down to sort of a more normal level at the moment of 50%. However, it’s still quite high. Yeah, there’s still a lot of people who face up to a repricing, and the key thing is that they’re probably still going to be looking at a change in interest rates, an increase in their rates. So what might that be? Well, it’s hard to know.

The chart on the left-hand side, all we get from Reserve Bank is when the loans are due to reprice. We don’t know when they were taken out, you can imagine somebody who’s coming up to a repricing on a loan they took out five years ago. We’ll be looking at a different change in interest rates than somebody who took out a loan one year ago or two years ago. So it’s hard to be sure about any of this, but as an example, if we look at the right-handed chart here, this is assuming you’ve been on a series of one-year fixes, which is probably what most people have been doing. While their change in interest rates might be, you can see through 2020-2021, the interest rates have fallen. So people who are repricing off a series of one-year fixed rates saw their rate decline or fall each time, so they were benefiting from that. However, then it got to the point of mid-2021, where interest rates started to go back up again, and that repricing involved an increase in interest rates. You can see for the last little while there through most of 2022, people have been looking at a two-and-a-half to three-percentage-point change in their mortgage rates. So they might have been going from those ultra-low, let’s say two percent, up to four and a half or something like that. Soon they’ll have to reprice again. To the right of that dotted line on the right-hand chart, that’s what the change might be as we progress through 2023. So, you know, it’s pretty typical over the rest of the year that somebody on a series of rolling one-year fixes, they might have already repriced once. They’ve gone from two to four and a half, but they’ve got another repricing to come, and they could see them go to six and a half. So that’s how that line is. That’s what it’s trying to show you. But as we progress through 2023, this is the change in interest rates that people might be looking at. So you can see it’s still quite high. For most of the rest of this year, the change is still two and a half to two percentage points, that sort of thing. But once we get to the tail end of the year, that change is a bit smaller, you know, point five percent, maybe one percent, maybe. At the moment, people are going from low to high, and that’s still a challenge for household finances. But as we get towards the end of this year, people will be repricing from high to high or even professionally from high to low.

There’s still some challenges. This adds to my sense that the housing market is going to be restrained a little bit to come yet, but towards the end of the year, if mortgage rates are peaked and even starting to come down a little bit, this reprice has kind of fully worked its way through, people have fully adjusted to these new interest rates. Then, and I think that takes away one of the kind of handbrakes on the market.

Just quite clear on other things and wider lending rules are still relatively restrained as well. Their loan-to-value ratio rules are still pretty tight. The banks do have that allowance for low deposit finance outside the LVR rules, and that’s pretty much all going first-time buyers. So that helps explain that relative strength of first-time buyers. Interest-only lending is still relatively controlled as well. The chart here is the share of lending going out on interest-only terms to investors in the solid purple line there, and to owner-occupiers in the solid blue line. That’s the flow of lending each month. So you can see within investor lending each month there’s still sort of 40% of lending does go out interest-only, but if you look back sort of three, four, five years, that was much higher, 50% or 60%. So interest-only lending has come down. It’s come down for investors; it’s come down for owner-occupiers.

And then the dotted lines there, and the existing stock of loans, you know, how many outstanding loans are on interest-only terms? And of course, if the flow has been going down, the stock will come down over time as well. So that’s why those dotted lines have been trimming lower. So interest-only lending is relatively controlled, non-performing loans at the banks are very low. We’re not seeing mortgages sales. So, you know, the slide, the previous slide talking about that refinancing wave and how there was a lot to do kind of a couple of years back, like I said on that slide, it’s been managed pretty well. This process is kind of working its way through. We haven’t seen a big rise of non-performing loans or mortgagee sales. Yes, people’s finances have had to be adjusted, but so far, the process has been managed pretty well.

Just one thing to point out though, on the right-hand side here, this chart, the banks have been putting bigger provisions on their balance sheets for potential bad debts. So this is collective provisions for bad housing loans. On the right-hand side here, you can see that has been going up in recent months. So just something to be aware of, the banks are preparing for it. The scale of this, you know, seven, eight hundred million, is pretty tiny in the scale of things. The total stock of outstanding mortgages across the country is worth about 350 billion, something like that. So similar 800 million is pretty small, but you know, just that’s the direction of travel. That’s the interesting thing, and it’s starting to creep up a bit. So, I guess banks are preparing for it, but they’re not preparing for a wave of bad loans. So again, the process has been managed pretty well so far. I think the expectation is that it stays that way, but yes, some challenges for households in terms of their budgets.

Near-term challenges, but late 2023 could look a bit better.

Okay, so, uh, just to kind of bring it all together, I think there are definitely near-term challenges for the housing market, no doubt about that. But late 2023 could start to look a little bit better from that perspective of sales activity improving and in-house prices stopping falling, which, like I said earlier, would be first-time buyers would actually prefer to be kept on falling, but different perspectives there, part of the – part of the challenge, I think, for the housing market, not only in the next year but the next five years, the next 10 years, is the housing affordability is still up in problems. So, you know, even if I’m right, the house prices find the floor at the end of this year and maybe they start to rise a little bit again in 2024. I don’t think the growth is going to be very strong at all because we’ve still got stretched housing affordability. And so, these measures, take a look at this on the left-hand side here. We’ve got national measures, the value-to-income ratio, and it’s a lighter variable purple color that has improved, yes, as house prices have gone down and incomes have gone up, that ratio is fallen, which is an improvement in housing affordability as that ratio gets lower. But look where it started, it was in an extremely high level, sort of late 2021, early 2022. And yes, it’s come down a bit, but the improvements have been pretty small and from a stretch position. So, you know, there’s still a lot more work to do on housing affordability. When you look at mortgage payments as a percentage of income, that’s the dark blue line there, that’s actually got a little bit worse in the last few months as uh, so yes, house prices have gone down and incomes have gone up, but certain mortgage rates, so that measure is actually the cash that people are paying is a share of income has actually just got a little bit worse lately. So, housing affordability is still a big challenge for the market, and I think it does restrain, it’s a long-run handbrake. You know, even if the market does reach a floor this year and start to rise again next year, it’s not going to be off to the races again. Affordability is still really stretched. So, that five or ten year horizon for affordability is going to restrain house price growth, and it signals that we need more housing, you know, perhaps we need different types of housing, more intensified use of land. you know, a sort of uh, a housing stock that allows more access for different buyers. So, you know, some challenges there, things to be worked through. But switching to the main centers on the right-hand side, just to illustrate the position around the country, again, it’s pretty similar messages. So, this is the mortgage payments as a percentage of income in each of the main centers. And I wouldn’t necessarily look at the levels per se. I mean, there’s, you know, you look at Tauranga and see that at 60-70% that looks pretty stretched. I think it’s important to look at Tauranga relative to its own history and relative to sort of the other markets. So, it’s more about that. It’s saying, “Okay, Tauranga is, you know, it’s pretty stretched compared with its own past and it’s stretched compared with other parts of the country.” So, it is still quite an expensive market. But all of the main centers have seen a decline in housing affordability on this measure. Each of these lines has gone up, which is worse for housing affordability, and it has seen very, very little improvement lately. So, there are definitely still some challenges on housing affordability. That’s a long run handbrake for growth.

Oh yes, trying to build that case for the floor for the market towards the end of the year. We’re going to see the unemployment rate rise, I think, and that’s going to probably potentially take over in terms of householders’ minds about sort of issue number one. You know, up until recently, it’s been high mortgage rates as a concern number one. I wonder if rising unemployment soon takes over as issue number one. But also important to point out that even if we do see the unemployment rate go up, which is what the Reserve Bank’s projecting, and starting from a very low level, which is what I’m showing this chart here, it’s currently running 3.2 percent, 3.3 percent, so very, very low. And there’s a bit of a distinction you make here. So, the Reserve Bank is projecting that the unemployment rate rises, but it’s mostly due to new people coming into the labor force, so new migrants to the country, people coming back from a break, raising kids, coming back into the workforce, these types of things. Wages are high, so people have drawn into the labor force, but just at the time when perhaps job creation by businesses slows down. So, those people coming into the labor force find it harder to get work, and so they get recorded as unemployed, as opposed to job losses. I think people who are already in work will largely hang on to their jobs -so it’s not about job losses, it’s about unemployment rising due to new people coming into the labor force and finding it harder to get work. You know, businesses that want to protect their existing employees at all costs, really, given skill shortages and these sorts of things. So, if people are in work, they’re probably going to keep their job, they’re probably going to keep their income, and they’ll keep servicing that mortgage. So, there could be a sort of two-speed thing here, where people who are in existing work, have an existing mortgage, yes, they’re gonna have to adjust their finances, but we’ll have a degree of insulation, I suppose, in terms of protection against mortgage sales, these types of things. But new people come in will find it harder to get a job and perhaps won’t be able to borrow as readily.

So, a wee bit of a two-speed thing there, and I think it does just soften, you know, when you see headlines about the unemployment rate rising, it’s quite quite striking, it’s quite concerning, but just their nuance here that it might not necessarily be about job losses, more due to a potentially bigger labor force. So, that to me that sort of does lend a little bit of support to the housing market as well. So, first point is you’ve got mortgage rates peaked, maybe starting to come down again. You’ve got unemployment rates not necessarily going up due to job losses, you know, job loss. People in work keep their job will tend to have a degree of insulation, so mortgage rates creep down a bit, people stay in work. Those are a couple of factors arguing for the downturn in housing to come to an end.

And then the third thing to add to that list is net migration. So, we’ve seen net migration really turn around sharply in the last six months. We’ve really seen a turnaround, and this is illustrated on this chart. The annual net migration flow which was negative sort of this time last year is now firmly back in the positives. So, I think I wouldn’t overstate its near-term role. I think there are still restraints here from credit conditions, I think that’s been the key factor. But fundamentally, you’ve got more people in the country now, new migration’s up, more people wanting to live somewhere that adds to property demand, whether it’s for rent or to buy, and that puts a floor under the market too. So this is sort of factor number three, just in starting to build that sense of, uh, of, uh, at the end of the downturn coming into sight. You see net migration turning around and that adds to that list. So this is definitely one to keep an eye on. It could, I suspect, you know, a lot of new migrants to the country will probably go into rental accommodation first, you know, while they suss things out, figure out where they want to live, what job they might have. So it could show up through rents more than property prices, but eventually, it’s still property demand that still kind of puts the floor under the market.

So those are, those, as I say, those are sort of one or two or three pretty key fundamentals. I think you can also add in their mindset shift, potentially. Now, this is very hard to quantify and very, uh, sort of, uh, a bit abstract, but you know, we know psychology plays a role in the housing market. We know the mindset plays a role. And by the end of this year, the downtown will have been in progress for a couple of years. It’ll be quite deep and long by then. Just this idea that at some point, the mindset shifts around, people think, you know what, there’s probably some value out there again. I’m going to start buying. And very hard to know when that happens, so it can turn on a dime, so to speak, but just that mindset shift, I’m weary off towards the end of the year as well.

And then property investors, you know, we’ve got an election coming up. Um, National, if they won, which no guarantees, who knows what’s going to happen in politics, but if they won, National was firmly pledged again that they will reverse those tax deductibility changes for investors. So if that becomes, if the polls are starting to show a potential win for National, well, I think some investors could try and get ahead of that and start saying, yep, I’m going to get my tax, benefit back. I’m going to go buy property again. So, and potentially, if they buy this year, they’ll get ahead of debt-to-income ratio caps, which I think are coming for new mortgages next year, and they will tend to hit investors harder than owner occupiers. So, for me, there’s a chance that investors start to come back towards the end of the of the year as well, and that just adds the sense of the downturn. Finally, bottoming out towards the end of 2023, so this slide kind of summarizes all of that. I mean, we’ll see low sales for a little bit. Yeah, prices to fall further, but those things to flatten out as we get to the end of the year. I talked about mortgage rates peaking. People can potentially quantify their worst case now. Rising at migration, investors trying to preempt the election, I suppose. In terms of regional considerations, you know we have seen Auckland and Wellington fall pretty sharply and earliest. So, you know what goes up must come down, I suppose. What goes down might go up, and it could be that actually those markets that have fallen first and fall and fastest could then reach the floor quickest and start to recover a bit quicker than elsewhere as well. So, one thing to keep an eye on, but again longer-term, there are still some big issues here. We’ve still got housing affordability as a problem. Even if things bottom out this year, it’s not going to be boom times again in 2024. We’re still going to have stretched affordability. The government’s looking at land reform so we’re opening up a new supply for housing, and the tax system just seems to be on average more weighted against property than it used to be. So, I think there are some longer-term restraints on the market. We’ve still got challenges we need to really think about. I guess the houses we build, especially in light of cycling Gabriel. You know the houses we build, the types of properties, where we build them, these types of things, and what best caters to the, I guess, society changes, the way that people want to live. Do they want a big lawn anymore? These types of things. What types of properties are they more interested in? Things that are healthier and more sustainable and warmer, well insulated, you know, these types of things, well designed with access to public amenities and these types of things. We’re seeing build to rent come onto the horizon a little bit to people who actually want access to a gym and public spaces. These types of things like we see overseas. So, yep, definitely some longer-term issues there. Near-term, hopefully, I’ve given you a good steer on what we think about the housing market at the moment.

Is it a good time to buy? Well, I think, you know, if you’re a first-time buyer out there, it depends on your situation, of course. you know, I always think that it has to be, hopefully, more about just the financial side of it. Yes, it matters, but the non-financial side matters too. And, you know, you need to, you might want to be, you might like a house, you might like a location, you want to establish that base. You know, if that was me, I’d probably just buy, because, you know, it’s about more than just those financial considerations. And, of course, you never know what’s going to happen to mortgage rates later. You never know what’s going to happen to credit conditions. Yes, you might wait and get a cheaper house price, but you might miss out on a house you really like. So, there are definitely considerations out there. You know, there seems to be a decent selection of stock at the moment. And ultimately, for me, not financial advice here by any means, down to the individual, but I think, you know, when you’re buying for the long term, you want to live there 20, 30 years, then, you know, it’s going to be about more than just those financial things.

All right, so I think that’s really it from me. Uh, just to say thank you, and we normally have a Q&A, not going to be as really as much of an option on this particular format, but, um, just to say thanks for taking the time to watch and, tune in to our podcast there and if you get a chance. So, thanks for listening and all the best in your property decisions.