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1. InflationIn a low inflationary environment increases in property values happen over a sustained period of time. The important thing for property is that some level of inflation exists which enables this slow but steady growth to occur. It is unlikely that in the foreseeable future we will experience the record low inflation of the late 1990’s or the record highs of the late ‘70’s and early ‘80’s. What we expect to see is a continuation of inflation at levels we are currently experiencing, which translates to slow and steady growth in the residential property market.
It’s about time in the market not the timing into the market. 2. Supply & DemandOne of the main factors influencing the New Zealand property market over the past three years, especially in the larger cities, has been immigration. As at 31st January 2007 a new migrant was landing in New Zealand approximately every 25 minutes! Net migration over the past three years has averaged 15,000 each year, which in property terms means an annual demand for new accommodation of 5,000 properties per year. Immigration figures will vary year to year depending on world economies, the New Zealand dollar and the New Zealand Governments attitude and policies supporting and encouraging new migrants to consider New Zealand home. Internal demand for investment property is best highlighted by Housing New Zealand’s ongoing requirement for 2,000 plus urgent properties per annum and demand for investment property in New Zealand’s largest centres will be steady and continuous. In summary, demand for investment property will remain a constant. 3. Interest Rates
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As cliché as it may sound the property market is cyclic, with peaks and troughs largely being influenced by three primary factors:
The size of our economy and the ease with which world events can impact on our dollar will see interest rates continue on the roller coaster ride that has been a trend in this country for the past ten to fifteen years.