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Going to sea to support the Team
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Squadron members, families and friends had waited four years and now it was time to be part of the action on home ground. Westhaven waters churned and bubbled each race day with the mass exodus of yachts and motor yachts heading off to bag the best seats in the house. 1/ Cheers for ETNZ from Colin Carran’s Defiance team. 2/ The crew on board Mike Malcolm’s Affinity. 3/ An optimistic crew on board Fine Line. 4/ Guests on board Escape make their getaway. 5/ The flags tell the story on Solace. 6/ Noel Davie dresses Rhapsody. Pictures by Debra Douglas
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The New Zealand housing market proved to be incredibly resilient in 2020, contrary to many predictions when COVID-19 first appeared. Our median house price is at record highs nationally (and across several regions), and total volume transacted in recent months has also been at historically high levels.
What are the drivers of the market appreciation? In our view, the housing market has been supported by three key factors:
1. Lower interest rates: the RBNZ reduced the official cash rate from 1.00% to 0.25% in March and banks have since followed with mortgage rate reductions and lower term deposit rates. This has improved affordability for many first home buyers and forced some investors who may have previously held term deposits to look for alternatives like housing. 2. Pent-up demand: Largely first home buyers who have struggled to enter the market for many years have sought to purchase following the March lockdown. The demand has likely been compounded by some New Zealanders returning home from overseas due to COVID-19.
3. Limited supply: This is a well-known issue in New Zealand. Housing stock growth has not kept up with population growth, particularly in the major centres, in recent decades.
Looking ahead into 2021 Looking ahead, we will be watching closely for signs of change. This means closely monitoring the housing market strength, its flow-on impact on the economy, and considering how that is likely to influence the RBNZ’s decisions on interest rates.
There is a risk that the RBNZ may decide to try and take the steam out of the market with renewed lending restrictions (e.g. officially imposing higher LVR limits on investors) or via other macro prudential measures. In addition, continued first home buyer participation is also important to see growth in value remain a feature.
Finally, on the issue of limited supply, any material changes to land availably and possible changes to the Resource Management Act should be watched; however we would not anticipate a quick fix solution to supply issues.
As active fund managers, the housing market provides important signals for us about the health of our economy and investor appetite for risk. A strong housing market has significant flow-on effects to the wider economy, supporting confidence and spending by consumers and businesses.
Disclaimer: This article is intended to provide general information only. It does not take into account your investment needs or personal circumstances. It is not intended to be viewed as investment or financial advice. Should you require financial advice you should always speak to an Authorised Financial Adviser. If you would like to speak to a Milford Adviser please contact us on 0800 662 347.
