Auckland appears to be following the trend set by Melbourne and Sydney of a softening in expected prices for selling houses.
Sydney’s property market is cooling for the first time in two years.
Melbourne is shaving the froth off the beer.
Auckland is going from nuts to fractionally less nuts.
The impending five year bright line test, and the ban on foreigners buying existing homes, also signals a price cooling.
This is likely to be good for house buyers – especially locals. That is the policy intent.
My experience over a few decades is that the hardest hit will be apartment owners in lower-quality blocks whose repayments from rent cover the interest but not the principal.
On previous trends, a fair few apartment owners who could afford it only by renting out and paying the minimum, will find themselves paying mortgages of an amount higher than the market value: they go “under water”.
A few of those won’t be able to sustain that, and sell at a minor loss.
At that point a few in the media will lose their shit.
My advice would be: be cool.
This is necessary, and this is planned.
As noted by the IRD in its paper on the “bright line test”, it does not “impair private property rights, restrict market competition, reduce incentives on businesses to innovate and invest, or override fundamental common law principles”.
But we should expect media discussion that it does.
So not chaos, a good change for first home buyers, but some tough media stories coming up.