Latest / Best of Business / Brendan Larsen: Milford Asset Management expert on the state of the international housing market

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Brendan Larsen: Milford Asset Management expert on the state of the international housing market · Best of Business

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