10 Nov What a change of mood can do for the property market?
Extract from the Crockers Market Research Issue 52, November 2009 Last month we reported on the relative high point in net permanent and long term migration levels – with New Zealand’s net gain in population rising, we showed, primarily as result of fewer departures rather than more arrivals.
Even with most new arrivals settling in Auckland, current migration patterns are not enough to account for the buoyancy of the local property market.
So what is driving it? In our view, it’s latent demand. That is, people who have been putting off buying because of the recession, and who – collectively – have suddenly decided that, recession or no recession, it’s time to get on with life. It’s not that we’ve suddenly all become optimistic.
In fact, we’re still worried about the prospect of losing our jobs (market research company Synovate reported in their May ’09 research study that for 33% of New Zealanders their biggest worry was them or the main household income earner losing their job – up from 29% six months earlier).
In fact, New Zealand has one of the highest levels of concern in the Western world around job loss, way ahead of closest neighbour Australia. Despite this gloomy mood, the same research shows that people are now getting on with their lives.
In November 2008, 23% of those surveys said they were delaying a major life decision. By May this year, this figure had tumbled to just 16%. Of those 16%, most said the two biggest decisions they were delaying were a change of job and buying into the property market.
Further research since then, including data from the Westpac McDermott Miller survey, shows consumer confidence has risen despite GDP still failing to reach positive figures.
While this confidence may be fragile, there is little doubt that people are bored with the recession, and are trying to turn themselves around attitudinally, as well as financially.
The buoyant Auckland property market is perhaps the clearest sign so far that people have stopped delaying the big decisions in life, and are looking positively to the future.