Real estate boss says any talk of a crash is irresponsible

Wednesday, 15 June 2016

Real estate boss says any talk of a crash is irresponsible

National Manager of Century 21 New Zealand, Geoff Barnett, says any talk of an imminent real estate crash in Auckland is irresponsible and says such a dramatic turn of events is unlikely.

His comments come as REINZ today released its latest statistics which show the Auckland median house price now at $805,000 – up from $749,000 12 months ago. At the same time the national median house price (excluding Auckland) is at $385,000.

“Some commentators are now trying to compare the real estate market to the sharemarket excitement leading up to 1987. It’s completely different. Auckland house prices aren’t rising off the back of speculators having a bit of fun. They are continuing to rise largely because there’s a shortage of supply.

“Auckland is somewhat protected by unrelenting population growth. The region grew by 43,000 people last year and is forecast to grow by another 400,000 in the next 17 years – which will no doubt be surpassed. Let’s not forget every Statistics New Zealand growth forecast for Auckland has always been well beaten.”

Mr Barnett says another thing to consider is the fact that it’s not unusual in a global sense for a country’s dominant and only international city to have much more expensive residential real estate than other centres in that country.

“Auckland’s effectively playing catch-up. It’s housing stock was arguably undervalued for a number of years when you consider its New Zealand’s commercial capital and largest city by far.

“Younger people are having to buy further out, spend more time commuting, and more people are renting. But for better or worse, that’s no different to what other international cities have experienced for years. I’m not saying it’s ideal, but it’s certainly not unusual in a global sense.

As the world’s biggest real estate company, Century 21 has a lot of international experience with countries that effectively deal with two real estate markets - the dominant city or cities and the rest of the country.

“Some commentators seem determined to get some people unnecessarily worried. Let’s not forget we have the independent Reserve Bank, Inland Revenue Department, and central Government, not to mention our rigorous retail bank sector, which are constantly investigating the different levers at their disposal as well as continually revaluating the marketplace,” says Mr Barnett.

www.century21.co.nz

ENDS

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