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Speaker 1: Now we might have some signs of life in the

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Speaker 1: housing market. Core Logic's latest numbers are showing a point

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Speaker 1: three percent rise in property values in February. Now that

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Speaker 1: follows a four point one percent drop over March to

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Speaker 1: September last year. This is the biggest game since January

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Speaker 1: last year. So is this the sign of a recovery. Well,

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Speaker 1: someone who will know this is Calvin Davidson, whose core

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Speaker 1: Logic's chief property economists, and he joins it now, Hello, Calvin,

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Speaker 1: good morning. Why's it going up?

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Speaker 2: Well? Interest rates basically, I mean we've seen before the

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Speaker 2: impact that lower interest rates can have, and I think

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Speaker 2: we're seeing there again. There are still restraints as well,

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Speaker 2: things like the week of labor market. There's a lot

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Speaker 2: of listings out there, so I think you'd probably still

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Speaker 2: call it a buyer's market. But certainly the impact of

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Speaker 2: lower interest rates is huge. People can just have a

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Speaker 2: bit more cash to spend on a house, all right.

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Speaker 1: Well, prices are down nearly seventeen percent from the peak

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Speaker 1: in the middle of the pandemic, where we just decided

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Speaker 1: to buy houses because we had nothing else to do.

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Speaker 1: But we're still well above the pre COVID numbers. By

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Speaker 1: seventeen percent, So are we going to continue to be

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Speaker 1: so volatile?

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Speaker 2: I think we're probably setting into a more stable phase

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Speaker 2: and the interest rates hopefully have settled down a bit.

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Speaker 2: I think COVID's five years on now, so you think

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Speaker 2: we're back to some kind of normality. We've got a

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Speaker 2: little bit of wage growth coming through, so you think

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Speaker 2: that there's a recently steady path of the house prices ahead.

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Speaker 2: But I don't think we're going to go into a

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Speaker 2: new boom because there are those restraints out there. There

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Speaker 2: still are a lot of listings. Affordability is a challenge,

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Speaker 2: and this time we've got debt to income ratio restrictions

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Speaker 2: which we didn't have last time. So as interest rates

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Speaker 2: come down, particularly those test rates at the benks, the

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Speaker 2: internal rates they check affordability with. As they come down

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Speaker 2: that's been in debt to income ratios start or start

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Speaker 2: to take hold, then they will sort of limit loan

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Speaker 2: sizes and limit house prices. So there's sort of forces

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Speaker 2: in both directions.

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Speaker 1: I guess we've always talked about house supply. Is that

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Speaker 1: still a problem.

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Speaker 2: Well, I think really the I mean measuring housing housing

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Speaker 2: shortages is a little bit tricky but I think at

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Speaker 2: the moment there's a general feeling in the market's fairly balanced,

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Speaker 2: and we've seen that. Okay, the construction sector has been

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Speaker 2: in the downturn over the past couple of years, but

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Speaker 2: prior to that had a huge boom. Some of that

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Speaker 2: tail end of those properties are still coming through, still

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Speaker 2: being put into the market or finished. So I think

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Speaker 2: supply and demand are probably fairly well balanced. Actually, we've

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Speaker 2: had net migration tail off a lot, so population growth

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Speaker 2: has slowed down. So I just think the risks of

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Speaker 2: shortages and I guess spikes and house prices driven by

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Speaker 2: not having enough houses, I think those risks are much

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Speaker 2: less than the past.

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Speaker 1: And can New Zealanders still bank on their biggest asset

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Speaker 1: continuing to appreciate year on year or not?

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Speaker 2: I think so. Yeah. I mean, you tend to see

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Speaker 2: through time a bit of general inflation, you tend to

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Speaker 2: see some wage growth, we tend to see population growth.

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Speaker 2: All of those underlying fundamentals, if you like, supportive for

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Speaker 2: house prices. But yeah, I just think it's probably a

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Speaker 2: steadier past than perhaps some of the big booms who've

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Speaker 2: seen historically, partly because of those debt to income raciare

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Speaker 2: restrictions and maybe just maybe there's a wee bit of

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Speaker 2: a societal change going on where people are actually realizing

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Speaker 2: iver rising house prices are not necessarily a good thing,

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Speaker 2: especially for the next generation trying to buy, So had

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Speaker 2: to measure, had to say if that's for sure, but

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Speaker 2: just a sense that's going on. So I think we'll

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Speaker 2: see rising house prices, but maybe sly in the past.

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Speaker 1: Well that's good news, Kelvin, and I thank you for

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Speaker 1: joining us. Kelvin Davidson, core Logic's chief property economists. For

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Speaker 1: more from

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Speaker 2: Earlier edition with Ryan Bridge, listen live to news Talks

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