AirBnb?

So, in my own personal journey to make sense of the housing market I have been feeling a little frustrated. All I hear from experts and non-experts is the same thing – “its going up and it can’t possibly go down”… I literally hear folks say “housing prices can’t go down in New Zealand”… also, no one seems to be taking account of the fact that we just experienced the largest fall in GDP over a quarter ever…even bigger than the great depression. Infact, quite the opposite, yesterday I heard someone in the industry try to tell me the economy is on fire…they also tried to tell me immigration is going to grow next year … I don’t buy it.

My gut feeling is that when all the experts are saying the same thing, then at least some of them must be wrong…

That leads me to really dodgy research and theorizing as I try to make sense of it myself.

Here are my latest anecdata…

1. NZ seems to have a housing crisis it that we don’t have enough houses to go round – we have the lowest owner-occupier rates since the 1950s
2. the rental market is crushed with not enough availability and rents being high (see same article above).

However…the most interesting stuff I am seeing is :

1. there appears to be a huge growth in internal tourism, but it does not replace the amount of $ generated by the lost international visitors.
2. International tourism is (was) NZ biggest product in terms of generating $ from overseas
3. from 2013 to 2018 it seems the ‘shared accommodation’ (airbnb, book a bach etc) economy grew from occupying 8% of the total holiday accommodation market to somewhere between 12 and 20%
4. small towns like Raglan has almost no rentals but a LOT of airbnb accommodation

So…could it be that the low interest rates is driving the big buy up, but it is being done by older NZers buying a second home? As this drives the prices up less and less new players can enter the market as the houses become unaffordable…

However… could it also be true that these folks can’t live in two places at once so they either renting their place out long term or using it as airbnb accom? Certainly in Raglan I think, looking at the listings, it is more likely they are listing these second houses in airbnb…

Also it seems the forecast is for growing unemployment. It also seems that NZ is recovering from the recession ok (2nd and third quarters had the biggest fall in GDP in history at -12%)…but we are not going to open the borders for 12-18 months…

My gut is that all this is related. I’d bet that the rising unemployment numbers and the ‘returning to normal’ overseas will see asymmetrical migration – a growing net immigration loss over 2021 as more and more folks leave because the world is back to normal but NZ doesn’t increase it’s intake because it continues to be very conservative when managing the virus. If this is the case it will be very bad for NZ.

Could that also mean less demand for holiday accom? Would that mean folks would be keener to rent out long term pushing the price of rent down and releasing some of the pressure off the rental market? Would that in turn also slow down the housing market? Does a really slow recovery bring house prices down even with low interest rates in play?

I have no idea…

Of course and I really don’t know what I’m talking about but I’d like to try and get a handle on whats going on as I don’t trust things when everyone is in agreement and yet no one can give me a good explanation as to why and my own anecdata doesn’t co-relate to these opinions…