New reports indicate the global housing market has entered a significant downturn.
Existing home sales have neared recessionary levels and new home sales are expected to fall.
Milford Asset Management's Brendan Larsen explains further.
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Speaker 1 (00:09):
You're listening to a podcast from News Talk st B.
Follow this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Here the water waste of wireless can do it for
far less. Corus shares the real winner here, Thanks Matt.
Sixteen past six. Now let's have a look at the
international housing market. Brendan Larson from Milford Asset Management is
with me.
Speaker 3 (00:27):
Hey, Brendan, good evening.
Speaker 2 (00:29):
So we've had a bit of data, new data on
the US housing market out today. How are things looking
to you.
Speaker 3 (00:35):
Yeah, so sort of a bit of a continuation of
some softer data we've seen. So housing market data this
morning showed an unexpected decline in prices, so that sort
of added to a recent space of sort of weaker
data we've seen housing starts, for example, the down about
seventeen percent already this year, we've seen a surge and
sort of the number of sellers versus by it. So
(00:56):
this differential is now the widest since twenty thirteen. So
looking at sort of existing home sales as well, that
continues to fluctuate sort of around recessionary levels. So a
number of data points all sort of in the wrong
direction at the moment.
Speaker 2 (01:10):
What's been driving the shift because I thought the US
housing market had been pretty resilient.
Speaker 3 (01:14):
Yeah, it had been resilient, And it's probably a good
point to touch on. I guess US households typically borrow
thirty year mortgages, so once they've locked in their mortgage rate,
they're typically less sensitive term movements and short term rates.
So when the FED began hiking, it meant those that
already locked in long term mortgages didn't feel the pressure
as much as as others. Perhaps consumers have also done
(01:37):
quite well in the US with sort of wealth gains
and income gains, and so that's been supportive. But more recently,
the sort of slowdown we've seen in housing data has
really come from a slowdown in economic growth and a
decline and consumer confidence really owing to fiscal policy in
the US, and so that's really what's changed.
Speaker 2 (01:55):
Okay, So how does the performance of the US housing
market compare to our own one?
Speaker 3 (01:59):
So US house prices are up about sixty five percent
since twenty nineteen, having fallen less in recent years, but
showing signs of softening. As we just sort of touched on.
New Zealand, property prices are up about thirty percent since
twenty nineteen and remained substantially off their peak, and despite
a significant amount of interest rate cuts, are really struggling
to gain momentum. Australian property prices, by contrast, they're effectively
(02:24):
still at all time highs, up about fifty percent since
twenty nineteen, and actually that average distorts some biggest state moves,
so Sydney and Perth prices are actually up fifty percent
and seventy five percent respectively. Auckland prices are up just
twenty percent over that same time period. So you can
see Australian housing has really outperformed New Zealand. I guess
(02:44):
looking at some of those sort of reasons why, perhaps
it's really to do with demographics and the sort of
supply demand between sort of those regions. So Australia had
enormous population growth really by immigration as a result of
a strong jobs market, and that influx of people demanding
housing when supply was really low really supported the housing market.
(03:06):
New Zealand is quite a contrast, So despite immigration that
was actually really strong after COVID, those immigrants were generally
lower skilled and lower income, and so we actually lost
a lot of higher income workers to Australia. So having
that sort of reduced demand at a time when supply
was increasing and regulation was making property investment a bit
less attractive. All of that sort of weight on prices
(03:29):
in New Zealand.
Speaker 2 (03:30):
Okay, And so what do you expect is going to
happen from here?
Speaker 3 (03:34):
Yeah, it's hard to tell. There's likely to be differences
across regions still. We think in the US, for example,
it's a little bit less clear. I guess on one hand,
consumer confidence probably does rebound a little bit given sort
of tariff risks have subsided, But on the other hand,
long term rates are still quite high, so affordability does
remain an issue. Australian housing is probably a bit more upbeat,
(03:55):
so they've got rate cuts coming through now, they've still
got population growth, and so that is really positive for
house prices in New Zealand. Anecdotally, I guess we're hearing
a lot of supplies coming to the market and so
that does pose a bit of a head into prices.
On a positive note, perhaps changes to foreign buyer rules
that are being speculated, you know, could be a positive.
(04:15):
But for the time being, it does feel like we're
going to continue to sort of muddle along.
Speaker 2 (04:20):
Brendan, it's good to talk to you mate. Thank you
for that, even if it's not altogether good news. Brendan Larsen,
Milford Asset Management.
Speaker 1 (04:28):
For more from News Talk set B, listen live on
air or online, and keep our shows with you wherever
you go with our podcasts on iHeartRadio
You're listening to a podcast from News Talk st B.
Follow this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Here the water waste of wireless can do it for
far less. Corus shares the real winner here, Thanks Matt.
Sixteen past six. Now let's have a look at the
international housing market. Brendan Larson from Milford Asset Management is
with me.
Speaker 3 (00:27):
Hey, Brendan, good evening.
Speaker 2 (00:29):
So we've had a bit of data, new data on
the US housing market out today. How are things looking
to you.
Speaker 3 (00:35):
Yeah, so sort of a bit of a continuation of
some softer data we've seen. So housing market data this
morning showed an unexpected decline in prices, so that sort
of added to a recent space of sort of weaker
data we've seen housing starts, for example, the down about
seventeen percent already this year, we've seen a surge and
sort of the number of sellers versus by it. So
(00:56):
this differential is now the widest since twenty thirteen. So
looking at sort of existing home sales as well, that
continues to fluctuate sort of around recessionary levels. So a
number of data points all sort of in the wrong
direction at the moment.
Speaker 2 (01:10):
What's been driving the shift because I thought the US
housing market had been pretty resilient.
Speaker 3 (01:14):
Yeah, it had been resilient, And it's probably a good
point to touch on. I guess US households typically borrow
thirty year mortgages, so once they've locked in their mortgage rate,
they're typically less sensitive term movements and short term rates.
So when the FED began hiking, it meant those that
already locked in long term mortgages didn't feel the pressure
as much as as others. Perhaps consumers have also done
(01:37):
quite well in the US with sort of wealth gains
and income gains, and so that's been supportive. But more recently,
the sort of slowdown we've seen in housing data has
really come from a slowdown in economic growth and a
decline and consumer confidence really owing to fiscal policy in
the US, and so that's really what's changed.
Speaker 2 (01:55):
Okay, So how does the performance of the US housing
market compare to our own one?
Speaker 3 (01:59):
So US house prices are up about sixty five percent
since twenty nineteen, having fallen less in recent years, but
showing signs of softening. As we just sort of touched on.
New Zealand, property prices are up about thirty percent since
twenty nineteen and remained substantially off their peak, and despite
a significant amount of interest rate cuts, are really struggling
to gain momentum. Australian property prices, by contrast, they're effectively
(02:24):
still at all time highs, up about fifty percent since
twenty nineteen, and actually that average distorts some biggest state moves,
so Sydney and Perth prices are actually up fifty percent
and seventy five percent respectively. Auckland prices are up just
twenty percent over that same time period. So you can
see Australian housing has really outperformed New Zealand. I guess
(02:44):
looking at some of those sort of reasons why, perhaps
it's really to do with demographics and the sort of
supply demand between sort of those regions. So Australia had
enormous population growth really by immigration as a result of
a strong jobs market, and that influx of people demanding
housing when supply was really low really supported the housing market.
(03:06):
New Zealand is quite a contrast, So despite immigration that
was actually really strong after COVID, those immigrants were generally
lower skilled and lower income, and so we actually lost
a lot of higher income workers to Australia. So having
that sort of reduced demand at a time when supply
was increasing and regulation was making property investment a bit
less attractive. All of that sort of weight on prices
(03:29):
in New Zealand.
Speaker 2 (03:30):
Okay, And so what do you expect is going to
happen from here?
Speaker 3 (03:34):
Yeah, it's hard to tell. There's likely to be differences
across regions still. We think in the US, for example,
it's a little bit less clear. I guess on one hand,
consumer confidence probably does rebound a little bit given sort
of tariff risks have subsided, But on the other hand,
long term rates are still quite high, so affordability does
remain an issue. Australian housing is probably a bit more upbeat,
(03:55):
so they've got rate cuts coming through now, they've still
got population growth, and so that is really positive for
house prices in New Zealand. Anecdotally, I guess we're hearing
a lot of supplies coming to the market and so
that does pose a bit of a head into prices.
On a positive note, perhaps changes to foreign buyer rules
that are being speculated, you know, could be a positive.
(04:15):
But for the time being, it does feel like we're
going to continue to sort of muddle along.
Speaker 2 (04:20):
Brendan, it's good to talk to you mate. Thank you
for that, even if it's not altogether good news. Brendan Larsen,
Milford Asset Management.
Speaker 1 (04:28):
For more from News Talk set B, listen live on
air or online, and keep our shows with you wherever
you go with our podcasts on iHeartRadio
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