Have we reached the peak?
Nobody can say with any certainty if we have reached the peak, you really only know where the peak of a market is after you have been passed it, until then it’s an educated guess at best.
What we do know is that while market fundamentals are strong i.e. interest rates are at record lows, net migration is at historic highs, supply is still very low and with strong demand from buyers, prices are more likely to remain under upward pressure.
What is having an impact is credit supply. Loan to Value (LVR) restrictions have been impacting purchasers, and we are increasingly hearing reports of banks reluctance to provide funding particularly in the Commercial and Development area.
What are we watching?
Uncertainty and risk are present, market participants need to watch general market sentiment, political policy changes, Reserve Bank changes to the OCR, and tightening credit supply from Banks. While on the macroeconomic side watch policy changes resulting from Trump’s victory and Brexit, and also issues around North Korea.
Our advice to clients remains to take professional advice and make prudent purchasing decisions. The market has slowed and there is downside risk for over optimistic purchasers exposing themselves to future market fluctuations.
A number of new residential subdivisions are under construction or in the planning stages. We have estimated that there are around 200 sites being developed or about to be developed with potentially many more possible if future stages are undertaken. Developers will need to watch the strength of demand prior to committing to large scale subdivisions.