Bargain hunters start to appear: Survey

The latest confidence survey from the Bank of New Zealand starkly illustrates what is happening in the property market. Sales volumes are down, as are buyer enquiries, but there is positive news (for landlords) on the rental front.

Tuesday, April 8th 2008, 12:00AM

by The Landlord

Overall the survey shows that cost pressures in the business sector remain intense with margins under pressure and that the labour market remains tight.

In the residential property market, BNZ chief economist Tony Alexander says, “buyers are hardly anywhere to be seen, prices are falling and only vendors willing to cut asking prices quickly get sales in a reasonable time.

“Landlords are easily getting rent increases, only a few bargain hunters have appeared as yet, and property developers are pulling back as fast as they can to try and minimise losses."

The following are some selected comments that highlight what is being reported.

Residential Property Investing Auckland:
A very buoyant market for renting. I rented two properties a couple of weeks ago within 48 hours to excellent prospective tenants increasing the rent on both by 7% and 8% respectively. I've increased rents by 4% to 10% on several existing tenancies. Only one I've left alone is a Remuera two-bedroom apartment.

I have a property in Wellington that will take a 20% rental increase in June, unfortunate for the tenant but the market in that location has moved 20% over 12 months and we have been forced to look in every nook and cranny for extra cash as five mortgages come off two-year fixed rates at 7.5% in May and June will see our interest costs increase by 2% or $22,000 per annum. Highly geared investors who have been going interest only for the past few years I expect will be going through some serious pain. Holding off buying at the moment and expecting the correction to provide some good purchase opportunities and long awaited improved yields.

Property Management North Shore: Rentals are going very well resetting all new leases between 7% & 10% above current levels. Lot of complaints from tenants but after they look around see they can't get better resign agreements. I believe this will continue with so many people staying out of the housing market for purchasing. Can't see this changing before spring, will be long hard winter for residential market with anyone needing to sell taking a severe hair cut to move on.

Property Investor: Cash flow tight and losing equity by the week but hanging in there. Not giving up my day job just yet!

Residential real estate Queenstown: A few family homebuyers about, but now we are seeing the "sharks" circling looking for bargains. Very few buyers for apartments so expect to see dramatic drop in these prices. Still some very good CBD sales. Purchasers are clients that are "cash rich" so no lending involved.

Property Management: More people looking to have their properties rented as they can't sell them for the price they want. I see our business expanding steadily but not with quality longer-term owners. Rents definitely on the way up and probably climbing steadily now for perhaps the next few years.

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