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Property predictions for 2018 - 29th Dec 2017

Property predictions for 2018

Real estate firm Colliers International's top predictions for 2018

 

• New Zealand investment groups will dominate rural property purchases. 
"Overseas buyers will chase urban assets instead, mostly due to the attractive returns, but also partly due to Overseas Investment Act restrictions on rural land purchases of 5ha or more," Colliers' forecast said.

• Extra office supply in Auckland and Wellington won't dent strong capital value and rental increases. "Syndicators and overseas funds will continue to be the dominant buyers of substantial city centre properties, as domestic institutions find it hard to justify buying at current price levels."

• The high level of confidence shown by industrial property investors in 2017 will prove to be justified. "Investors can expect more rental rises and steady (already very low) yields, particularly in the main centres," Colliers said.

• Increasing online retail activity will boost demand for warehousing from retail logistics providers. "This will be aided by continuing low fuel prices. In Auckland, a regional fuel tax will concentrate demand close to arterial roads," the agency said.

• Increasing staff costs and lower immigration will begin to prey on the minds of retailers. "This will particularly affect those in the food and beverage sector. However, the lag effect of these measures and continued positive consumer confidence will defer any negative effects beyond 2018, while robust tourism growth will counteract these effects in tourist hotspots," Colliers said.

• In a year, the national median house price will be higher than it is now. "Downside protection will be provided by base demand, which remains robust, low interest rates and, at the margins, easing of loan to value restrictions."

• Off-the-plan residential sales will get a boost. 
"Concentrating overseas buyers on new homes, plus a bit of Government buying, will begin to boost 'off the plan' sales, allowing supply in the following years to increase."

• Government efforts to increase skilled labour for the construction industry will be constrained. "Other Government policies, such as free tertiary education for a year, and reduced immigration will impact plans to train or import more labour. Construction cost inflation isn't going to go away in the short term," it said.

• The official cash rate won't go up until late 2018 at the earliest. "A shortage of quality stock for sale in a high demand environment will be a more powerful influence than marginally higher."

Read the full article here.

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