Mexican stand-off easing?

Over the past couple of months we have written about how there is a bit of a Mexican stand-off between vendors and purchasers in the housing market.

The commonly expressed view on this is that would-be buyers are expecting the market to fall even more than it has (because that is what they have read) and vendors are unwilling to quit at such prices. Many of these people have instead opted to rent their properties.

We have been researching the market for the lead article in next month's issue of the NZ Property Investor magazine to get an up-to-date feel on where things are at.

My take on this is that the big gap between buyers and sellers is likely to suddenly close and maybe close quite quickly, leading to a spike in the number of sales.

The people who will be buying are property investors. The feedback we get is they are out there, attending auctions, checking out mortgagee sales and looking for buys.

Plus there is a huge amount of pre-approved finance just waiting to be drawn down.

They are coming to the conclusion that there is finance out there, vendors aren't likely to move much lower and financing costs are starting to come down now the Reserve Bank has shaved 25 basis points off its official cash rate.

Adding to the excitement here is that the bank indicated it may cut the rate at each of its next six-weekly reviews this year – that mean cuts in September, October and December.

Then of course there is the prospect of spring just around the corner. Already I am hearing that banks may be more active with spring and summer home loan campaigns as they traditionally do – although they were almost absent last year.  (The main exception being ASB with its win a home campaign).