He is particularly critical of newspaper headlines which talk about the "collapse" of the Auckland apartment market because building consents slowed sharply in February. One or two month’s figures don’t constitute a trend and the reason consents are dropping probably has much more to do with the fact that we’re heading into winter, Trass says.
"All the fundamentals are still looking very sound. We’re getting a constant increase in demand which is only just being met by the level of supply. I fail to see how the market can go down when we’re literally only just building enough houses to meet supply," he says.
Economists are also expecting the Reserve Bank to cut interest rates in June. That can only stimulate the housing market further, Trass says.
He also notes that there’s no evidence of rental levels dropping off. "I only see evidence of rents constantly increasing on the back of more demand."
While unemployment may rise a little from current 14-year lows, that’s not likely to hurt the housing market much.
Historically high immigration also continues to support the housing market. ANZ Bank chief economist David Drage notes that the net gain of migrants in February was more than 5,000 people and in the year ended February more than 41,500, "an increase of 89% compared to the same period in 2002."
Nevertheless, Trass says he welcomes sensational headlines talking about the housing market collapsing. "They tend to scare away the unsophisticated buyers and create fantastic opportunity."
But far from slowing, the housing market is currently very active. "I’m still picking this is the biggest boom in Auckland that we’ve seen in 20 years. It’s just no one realises it yet," he says.
How long the boom lasts depends on developments over the next few months, but Trass’ current estimate is another 12 to 18 months.
