Gazing into the real estate crystal ball - Mary Holm
Tuesday 11 May 2004
Q. I am considering property investment. However, I have been watching the market from the middle of last year, and the prices are just too high!
I would like some advice about investing in areas like Howick, Flatbush and Richmond Park, because the prices in those areas aren't so high.
Is the market going down soon? If yes, how much will it go down - 10 per cent? 2
By The Landlord0 per cent?
A. Nobody knows. That's the point really.
The main reason that investments with higher returns, such as shares and property, get those higher returns is because they are riskier than term deposits and the like.
Part of that risk is that we can't tell, in advance, what prices will do.
Nevertheless, economists are often prepared to have a go at property forecasts. BNZ chief economist Tony Alexander, for instance, says: "I think we still have a wee bit of upside left before a minor price correction starts later this year."
How big is minor? He expects average prices to fall about 5 per cent "from some point in the middle of this year to some point in 2005".
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