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CPII Survey July 2019

PRESS RELEASE

Immigration a clear influence on house prices 

This month:

  • When comparing median Auckland sales prices with net migration figures, we see that spikes in sales do occur in the months following a large influx of migrants. Conversely, we see that median sales prices also fall in the 1-2 months following a migration drop. Immigration has a clear effect on house prices.
  • This month has seen an encouraging increase in confidence in the rental property market. There has been an 11-point increase in those who believe the rental property investment performance will get better. This now sits at its highest level since March 2018. Optimists are now three times more numerous than pessimists.
  • When buying or selling a property, most investors (77%) used a real estate agent. Of the investors who bought or sold a property through a real estate agent, a large minority (41%) felt their experience was either ‘average’ or ‘poor’.

 

The Connection Between Net Migration and House Prices 

Recent projected migration data from Statistics New Zealand indicates that there has been a slight drop in estimated migration to New Zealand following a peak in migration at the start of the year. This reflects changes in the economy and also government changes in migration policy. Using net migration figures from Statistics New Zealand and sales data from REINZ, we can compare long-term median sales prices with net migration figures to see if net migration has any influence on sales prices. Overall there are clear spikes in migration figures in January-February and July of each year.

The Connection Between Net Migration and House Prices

When comparing median Auckland sales prices (as most migrants settle in Auckland) with net migration figures, we see that spikes in sales do occur in the months following a large influx of migrants. Conversely, we see that median sales prices also fall in the 1-2 months following a migration drop. This confirms that while building more houses is one way to manage the supply-and-demand issue, reducing immigration is also a useful tool.

 

Crockers Property Investment Index

Auckland Rental Property Performance Index

The Auckland Rental Property Investment Index has experienced a record increase this month reaching its highest point since Jun-18 – a result of a substantial increase in those who plan to invest further in the market. Meanwhile, the Auckland Rental Property Performance Index has remained stable due to increases in both pessimists and optimists.

Auckland Rental Property Performance Index

 

Real Estate Experience

Last Bought or Sold a Property

This month we asked investors how they felt about their most recent real estate experience. Most respondents last bought or sold a property 1 to 3 years ago (57%).

When did you last buy or sell?

Professional Dealt With

A real estate agent was the most common professional used when buying/selling a property (77%). A private sale (15%) and a developer (6%) were less common. No respondents used an investment company.

Professional dealt with...

Real Estate Agent Experience

When asked about their last experience with a real estate agent, 59% of investors felt their experience was either ‘good’ or ‘excellent, whilst 41% rated their experience ‘poor’ or ‘average’.

Real Estate Agent Experience

Real Estate Agent Factors

When choosing a real estate agent, the most important factors for respondents was ‘level of communication’ (64%) and ‘personality’ (23%). Interestingly, only 9% of investors believed ‘the company they work for’ was the most important factor. 

Real Estate Agent Factors

 

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