Kathy's Blog - The NZ Property Market

Meet Kathy..... Kathy established her own property finding business in 2005 after completing an MBA with distinction at Auckland University of Technology.  Kathy's hands on experience in property investment began in 2002 when she bought her first do-up property. She has since bought and sold seven similar properties, all at a good profit. She owns a number of investment properties and is increasing this continually. Committed to ongoing professional development, in 2006 Kathy attended an Advanced Property Investing course with John Burley in Phoenix, Arizona. She is also a member of the Auckland Property Investors Association.

Welcome to the first edition of Kathy's Blog 

Over the coming months I will provide you with my opinions and observations surrounding the property market in New Zealand. So, what is happening in the New Zealand residential property market at the moment?

From my experience of putting in offers on properties every day, talking to a multitude of real estate agents, private sellers and investors (not home buyers) is that there has been a shortage of properties on the market mainly due to owners not wanting to sell in a buyer’s market. However this is slowly changing with the number of listings increasing over the past weeks. Properties in good condition and good homeowner locations have been selling quickly and at good prices. This could be due to the shortage of listings, the number of Kiwis returning from overseas and also new immigrants buying homes. In the middle and lower socio economic areas the properties are taking longer to sell, many of which are overpriced and can’t sell for less due to being purchased at the top of the market and owing the bank too much.

The number of mortgagee sales is at a record high; this appears to be properties across to the board, owner occupied and investment properties, most of these being overpriced.  Sales at mortgagee auctions are currently retail value, the bargains one would hope for are not there.

Homebuyers are finding securing finance more difficult with many of the banks only lending 80%. With the second tier lenders out of the market both homebuyers and investors have to provide higher deposits which has meant fewer buyers around.

So how does this all affect you if you are looking to invest currently? Firstly ensure you have lending pre-approved and you are ready to go. With this in place there are some good buys out there, amongst the higher priced properties where the owners can’t sell due to owing too much to the bank and other owners just testing the market, there are home owners and investors who just want to quit their property and are negotiable.

Interest rates are still low, or the variable rate is anywhere from 5.75% - 6.45% http://www.interest.co.nz/. There is plenty of talk that the interest rates are going to go up and we have seen all the fixed rates increase with 5 year rate at 8.65%. I have heard the strategy with lenders is to have more lending on variable and less on fixed together with the fact that all the cost of NZ lending is high as this comes from off shore. In my opinion NZ is feeling the outfall of the USA credit crisis however we have more to see. Unemployment is still low but on the increase, with the large down turn in the building sector being felt by all related industries.

Rents appear to be stable and I have not seen any go up nor down in the cities and towns I look for property in throughout NZ. This could however change if unemployment increases and here the cheaper rentals get snapped up quickly with the top end taking longer to tenant and having to reduce the rent to fill the property.

Who are the most active buyers, at the moment, there are many homebuyers out there putting in offers and I often come across properties where 3 home buyers have all had contracts on the property but could not get the finance. Part time and new investors are active, and the long term traders are definitely out there looking for the bargains. I am not finding nearly as many full time investors in the market due to them possibly not being able to get lending or having burnt out in the last peak of the market.

I really feel that right now and throughout 2010 is a good time to buy. We are at the bottom of the cycle and before the market picks up and starts improving now is a great time to invest. In saying this it does not matter what market you buy in, if the numbers work for you, if the deal stacks up, it’s a good time to buy.

Kathy Engelbrecht
http://www.houses4you.co.nz/