Over the past week two different stories made their way around the popular news portals. TA headline reading “Housing stock for sale passes a 10-year high on TradeMe” popped up on the Interest.co.nz website, easily gathering the highest number of comments on a story for a week, as cynical users gleefully celebrated the negative headline.

Meanwhile on the New Zealand Herald site: “Cheeky speculators return to South Auckland auction rooms” led a story that buyers looking for a quick resale are back in the Auckland property game, with property traders (those who buy looking to renovate and improve before they sell) “lamenting” that they were being priced out of properties.

In property investment circles, the Auckland housing market is “the canary in the coalmine “and tends to move first, so I was very interested in the latter story, while being quietly pleased at how many would read the former and decide to go play golf for another year.

Another data point: once a week the team iFindProperty hops on a call and chats about a topic of note. This week we did an update on what everyone is seeing in their local markets. With one or two exceptions it was the same story: more investor activity, more offers, faster offers, yields coming back a little on the good deals, more competition.

Those wanting a clear signal that the market has reached some kind of a bottom and turned, with a few months of data to back them up (or more consensus from the crowd), have another 12 months or so to wait. Perhaps longer by then be heading into an election. “Picking a bottom” can only work in hindsight, which is why I usually don’t try.

My opinion? We are there now, and the rest of the year is buying time. Here are a few reasons and thoughts why I think this, not all of which are a reason on their own for optimism, but pulled together start to paint a picture.

• Active investors are back in the market. This much is obvious. My team is hunting deals in multiple areas across New Zealand and the feedback is uniform: more buyers out there.
• Inflation is currently under control and well past the “the-world-is-ending” headlines phase. The “impending doom” feeling of rising interest and food costs has passed.
• OCR falls mean most Kiwis feel safer about the future than we did two years ago.
• The buying power of our dollar decreased through the recent inflationary period (things cost more dollars than they used to, except houses). At some point the waves of OCR cuts, a more confident employment market, lower interest rates, and a few news headlines will converge, and property will suddenly appear cheap again to a lot of people. Media hype will drive the recovery.
• There will be some inflation issues that arise due to the USA’s (idiotic to my mind, but that’s another story) tariff policies, however the world today is vastly different to the overheated economy of two-to-three years ago, which led to a damaging wage-price spiral. Businesses simply won’t simply be able to increase wages and raise prices.
• The public opinion on the government has shifted south. People are sick of cuts, blame and distractions. We want to see some results and progress. The government is going to have to deliver and to deliver it will have to spend. I expect a shift in tone and policy, otherwise I think we will have some new people at the top, followed by a shift in tone and policy.

Obviously, this could change. The world is becoming more fractured, current trade practices could embed and cause wider issues for New Zealand, our government is doing its best to make the previous administration look reasonable in hindsight, and insurance of property exposed to climate change risks will not get cheaper. There are serious macro issues still in front of us.

But for now, people need houses, and the cost of borrowing has come back to where investing in those houses appears to be more viable than before. As the RBNZ starts to signal where they will finish the current cycle of OCR moves, buyers in turn are concluding that today is about as cheap as property will get, so they might as well get amongst it.

Whether the early movers constitute the “smart money”, or risky speculators, I don’t know. I suspect there will be a bit of both at play because you can make, or lose, money in any market. I do know that those who buy well now will be very well set up in two-to-three years.