The property market is experiencing a decline in client enquiries as people wait for construction costs to decrease further. Rising interest rates and supply chain issues contribute to the cautious sentiment. While there is a shortage of plasterboard, the situation may not improve until a new factory opens next year. However, a shift in the market environment is expected, potentially driving discussions about falling mortgage rates and a future recovery. Developers who navigate the next two years may find demand justifying their land purchases. Real estate agents and mortgage brokers can expect a gradual decline followed by a recovery in the housing cycle.
The property market is witnessing a decline in client enquiries as potential buyers anticipate further decreases in construction costs. With rising interest rates and supply chain challenges, some individuals are finding it difficult to qualify for mortgages or perceive greater risks in the current market. The scarcity of plasterboard has garnered attention, and it is unlikely to improve until a new Gib Board factory opens in Tauranga next year. Additionally, banks are requesting more presales from developers before providing funding. Despite a scramble for supplies, a sector view suggests that construction volumes may decline significantly in early 2024. While buyers exhibit a lack of urgency, conditions that justify their hesitation are created as others adopt a similar approach. However, a shift in the market environment is expected, potentially leading to discussions about falling mortgage rates, driven by evidence of economic weakness.
Due to concerns over rising interest rates, some individuals are hesitant to make property purchases. The prevailing discussion focuses on when mortgage rates might start falling again, driven by economic weaknesses. However, a change in interest rate expectations does not guarantee immediate rate reductions, and such declines are unlikely in 2023. Moreover, attention will be given to net migration outflows and the potential decline in average house prices until mid-2023. Consequently, the housing market may witness a decrease in construction activity while maintaining a substantial number of interested buyers.
While the construction industry may face challenges in the next two years, developers who persevere can expect demand to justify their land purchases. Maintaining financing arrangements during this period is crucial until the market cycle eventually turns. By monitoring market conditions through regular surveys, developers can identify when buyers will re-engage with the market, potentially occurring in 2024-2025. Although this may not lead to a significant increase in house prices or a surge in construction activity, it provides opportunities for developers who have acquired land in recent years.
Real estate agents and mortgage brokers can anticipate a gradual decline in activity until late-2023. However, the decline is expected to plateau before a recovery in new dwelling orders, as typically observed in the housing cycle. Initially, buyers focus on existing properties, and as the supply becomes scarcer, the demand for new house construction begins to rise. Therefore, while activity may decline temporarily, a recovery is expected as the housing market stabilizes.
The property market is currently experiencing a decline in client enquiries as buyers wait for construction costs to decrease further. Rising interest rates, supply chain issues, and the shortage of plasterboard contribute to the cautious sentiment. However, there is an expectation of a shift in the market environment, with discussions revolving around falling mortgage rates and a future recovery. Developers who navigate the challenges of the next two years may find demand justifying their land purchases. Real estate agents and mortgage brokers should anticipate a gradual decline in activity followed by a recovery in the housing cycle, as existing properties are purchased before a subsequent increase in new dwelling orders.
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