Kiwis looking to property again
Wednesday 17 December 2008
A second survey out this week confirms the view that people are interested in buying property again and expect house prices to fall further.
By The Landlord
The first survey, conducted by Landlords.co.nz and Mike Pero Mortgages, asked property investors about their buying intentions.
“The survey results showed that 20.5% of property investors expected to buy more property before March 31 next year and another 28.6% expected to buy later in 2009,” Mike Pero chief executive Shaun Riley says.
He also said that 59% of respondents expected house prices to fall further in the next six months.
ASB Bank produced a survey today which supports these findings. Its one shows that a net 24% of respondents believe now is a good time to buy.
It also shows that 44% expect house prices to decrease in the next 12 months.
A key difference between the surveys is that the Landlords.co.nz/Mike Pero one is targeting property investors, while ASB’s audience is more general.
One of the issues for buyers at the moment is that banks tend to only want to do deals where the borrower has at least 20% equity in the deal.
ASB says this higher deposit “gives a bigger buffer in uncertain times.
“These changes do lift the bar a little for potential new borrowers,” the bank says.
However, it also says it is prudent, forcing people to “demonstrate greater thrift and financial discipline”.
It also, hopefully, avoids home buyers getting into a negative equity situation if house prices continue to fall.
Overall it suggests that the fundamentals of the housing market are still unfavourable: prices are high relative to income; migration flows are modest and job security now carries a degree of uncertainty.
“A pick -up in prices remains some way off, and the eventual recovery will be relatively modest,” chief economist Nick Tuffley says.
While that may be the case, investors are increasing their yields by putting up rents.
The Landlords.co.nz/Mike Pero survey shows that 41% of respondents had increased their rents in the past year and the increases had generally been up to 10%.
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