Property

No upturn ahead

This month’s real estate statistics hint we’re on the road to recovery. But a report from the BNZ this week says the latest numbers show we’re merely pulling back from an ugly brink, not facing the end of the downward slope.

Friday, August 15th 2008

BNZ analyst Tony Alexander says it would be wrong to believe there’s anything remotely smelling like an upturn around the corner.

He comments on both REINZ and Barfoot & Thompson’s data that indicated a slowing of the decline in sales volumes with greater matching up of buyers and sellers for an improved turnover. Their data showed no evidence of prices pulling back to a significant degree. Alexander says: “The median dwelling sale price for the entire country in July was $340,000. This was exactly the same as the median price in June and down by only 1.4% from a year earlier.”

He says, more significant though is the huge increase in the number of days to sell. On average in July it took 58 days, up from 53 in June. This was 27 days more than a year earlier. “It now takes almost twice as long to sell a property than it did a year ago. Compared with how long it has taken a property to sell on average in July over the past 10 years, the latest result is 17.4% days worse than average.”

Alexander says this is an extremely weak result and means we’re not suddenly seeing a rush of buyers into the market.

Given the REINZ and Barfoot figures, things don’t seem nearly as bad some people’s price drop estimates of around 30%. But even in the US, says Alexander, where the banks have experienced massive bad lending to people who should never have been given mortgage money in the first place, the prices have “only” declined 19%.

He says forecasts of massive price declines don’t stack up when you consider two rounds of tax cuts looking likely this year, falling interest rates and vendors taking their properties off the market.

But with slowing job growth, a weak labour market and employees becoming less secure in their jobs and less confident of wage rises, the real estate market is not out of the doldrums yet. These factors will cap willingness to purchase. When the market does show strength, vendors will start placing their properties back on the market, says Alexander.

 

Heartland Bank - Online 6.69
SBS FirstHome Combo 6.74
Wairarapa Building Society 6.95
Unity 6.99
Co-operative Bank - First Home Special 7.04
ICBC 7.05
China Construction Bank 7.09
BNZ - Classic 7.24
ASB Bank 7.24
ANZ Special 7.24
TSB Special 7.24
Unity First Home Buyer special 6.45
Heartland Bank - Online 6.45
China Construction Bank 6.75
TSB Special 6.75
ICBC 6.75
ANZ Special 6.79
ASB Bank 6.79
AIA - Go Home Loans 6.79
Kiwibank Special 6.79
BNZ - Classic 6.79
Unity 6.79
Westpac Special 6.39
China Construction Bank 6.40
ICBC 6.49
SBS Bank Special 6.55
Kiwibank Special 6.55
BNZ - Classic 6.55
Co-operative Bank - Owner Occ 6.55
ASB Bank 6.55
AIA - Go Home Loans 6.55
TSB Special 6.59
Kainga Ora 6.99
SBS FirstHome Combo 6.19
AIA - Back My Build 6.19
ANZ Blueprint to Build 7.39
Credit Union Auckland 7.70
ICBC 7.85
Heartland Bank - Online 7.99
Pepper Money Essential 8.29
Co-operative Bank - Owner Occ 8.40
Co-operative Bank - Standard 8.40
First Credit Union Standard 8.50
Kiwibank 8.50

More Stories

Support for regulation

Monday, March 18th 2024

Support for regulation

REINZ has emphasised the need for property management regulation to Parliament’s Social Services and Community Committee.

A better investment market

Thursday, March 14th 2024

A better investment market

“Reinstatement of interest deductibility starting from the new tax year on 1 April brings property investors back in line with every other business in the country, where interest costs are a legitimate deductible expense," Tim Horsbrugh, New Zealand Property Investors Federation (NZPIF) executive committee member says.

[OPINION] Recessionary times

Thursday, March 14th 2024

[OPINION] Recessionary times

It is not the best out there for many businesses and property sector people. Sales are down across the board, our clients’ confidence is falling, and there is a lot of uncertainty.

Interest rate expectations: It’s not over yet

Thursday, March 07th 2024

Interest rate expectations: It’s not over yet

Most Kiwis think interest rate increases have peaked.