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, 1:57PM

by The Landlord

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.

 

« Will Ha have the last laugh?Free Investment Property Showcase Events: Auckland, Wellington and Christchurch »

Special Offers

Commenting is closed

www.GoodReturns.co.nz

© Copyright 1997-2024 Tarawera Publishing Ltd. All Rights Reserved