The “fear factor” stalling New Zealand’s real estate market will fade away once people come to terms with the reality of the global financial situation.
Friday, October 24th 2008, 9:40AM
by The Landlord
Harcourts CEO Bryan Thomson believes once the world bodies pull us through the crisis, interest rates start dropping and the election is over, New Zealand will once again see property sales increase.
“As we come to terms with the new reality, we can move through this year and next year,” he says.
Commenting in Harcourt’s latest MarketWatch, Thomson said the first few weeks of September saw an increase in real estate activity, although towards the end of the month, this fell off in terms of volume of sales and new listings coming into the market.
"But then the flare-up in global financial markets appears to have reactivated the 'fear factor' here, with activity slowing again, presumably as people tried to make sense of the situation and how it might affect them," he says.
In many ways, he says, this confounded logic. “Right now owning a home is becoming more affordable by the day with interest rates falling, tax cuts starting and house prices easing to more attractive levels. Given this logic, it suggests that house buyers in particular should be active," he says.
Thursday’s rate cut should have a positive affect on buying activity, says Thomson. “Interest rates themselves don’t have so much impact as what they do to people’s perception. A significant drop will influence people’s confidence. If you own a house, a business or an investment, a drop in interest rates should put smiles on people’s faces and I think that’s long overdue.”
