Most global markets were starting to see the level of investor activity stabilise after a post-GFC boom. Picture / Getty Images
Most global markets were starting to see the level of investor activity stabilise after a post-GFC boom. Picture / Getty Images
Most of New Zealand's property market issues aren't unique and we are increasingly moving into synchronisation with global trends, says CoreLogic managing director for Data & Analytics Olumide Soroye.
"It starts from a macro level, if you look at the fundamentals in the US and New Zealand," Soroye says.
"Forexample GDP growth rates 2.5 per cent in the US last year, 2.9 per cent in New Zealand.
"If you look at unemployment rates, 4.1 [per cent] in the US - a 17 year low - about 4.8 in New Zealand. Interest rates are similarly low and consumer confidence is similarly high."
So the fundamentals were quite similar and that was translating into the housing market, he said.
As had been the case in New Zealand, most global markets were starting to see the level of investor activity stabilise after a post-GFC boom.
"There was obviously a peak period where we saw a lot of outright cash purchases and an unusually high percentage of home sales to investors."
CoreLogic says it has the most comprehensive property databases in the United States, Australia and New Zealand, as well as a growing presence in the United Kingdom, Canada, Mexico and India.
In New Zealand, Reserve Bank restrictions on lending for investment have been credited with slowing that part of the market.
But this was a trend across all the major cities round the world that had boomed in the past few years, he said.
Despite that slowdown the fundamental demand in most markets was holding up due to the volume of millennials looking to get into the market.
The stresses in most markets were on affordability and the supply side of the equation, he said.
That was creating inter-generational tensions everywhere.
"In the US for example, in the next 20 years over 20 per cent of the population will be over 65 years old. At the same time we are now seeing the millennials becoming the major part of the first-home buyers market," Soroye said.
"The millennials are coming to the market with a lot of student debt and a short credit history."
Soroye, who is based in San Francisco, said the tension was forcing people to accept that the "American dream" of owning your own home was becoming harder to achieve, driving more interest in multi-unit dwellings.
"Increasingly in the US the conversation is around, how do you have a more healthy mix that's not only about having your own yard."
Most global markets were starting to see the level of investor activity stabilise after a post-GFC boom. Picture / Getty Images
That had resulted in zoning laws and supply side solutions in the US, targeting more multi-family units.
Soroye said it looked like New Zealand appeared to have more acute issues with labour shortages constraining new building.
But there were issues in the US as well, where the question of construction constraints and labour supply could cause issues around the quality of new housing.
"You don't want to leverage low-quality labour supply that results in quality problems that may affect people's health," he said.
"That's where it takes that careful balancing of government policy around immigration and labour as a whole to make sure that problem is addressed in a way that is healthy for the housing system."
There was still a business cycle at play and expansions and contractions in the housing market weren't about to go away.
"Since the end of the Second World War we've had 12 of those cycles."
In fact the current expansion was getting close to the longest on record at 106 months, he said.
"Relatively, it's been a good stretch of growth but I don't think the bust needs to be as drastic as it's been in some of the cycles. That's where it's really about reducing the amplitude of the cycles."
As the global economic system as a whole became more synchronised the global financial system was learning how to managing those cycles better, he said.
