The next week is likely to see lots of news on what’s happening with house prices around the country.
First up is likely to be the QV data, followed closely by numbers from the Real Estate Institute.
The things I will be looking for are more evidence that the market is flattening out, rather than falling further and whether the stand-off between vendors and purchasers is continuing.
As noted previously there has been a bit of a Mexican stand-off with purchasers believing the mainstream media stories that house prices are going to fall 30% and when they get that low it is time to buy, while vendors are refusing to take such a big haircut.
This has, as mentioned last week, led to an increase in the number of properties being put into the rental pool. I see this week there has been more comment from one of the bank economists about this emerging trend.
One of the other key things to look at with the house sale stats will be the number of listings.
If the recent Barfoot & Thompson numbers are anything to go by some sellers have moved to meet buyers.
ASB Bank has suggested that on a nationwide basis sales turnover could well stabilise in June.
It says that the decline in the median house price has been very mild to date, though in part that is because the sales distribution is getting skewed.
“Sales turnover is dropping most noticeably amongst the bottom price bracket, implying the median price overstates the ‘true’ price level.”
There are some early encouraging anecdotes on the housing supply front – which has built up very sharply over the past year. The demand/supply imbalance in the market may now be starting to cap the flow of listings onto the market.
While that is the overall picture it is a little different from an investor’s point of view. It looks like the positive cash flow properties may return to the market again. For a long time prices and interest rates were so high that it was very difficult to find a property which had a half decent yield on it.
The www.landlords.co.nz website started a new section recently, Investment Gems, which is designed to showcase properties for sale which may be of interest to investors.
Some of the key requirements are that a property has to have one of these factors: a yield of at least 8%, instant equity (that is the purchase price has to be 10% less than the latest government valuation), have some vendor finance included, or have subdivision or do-up potential.
Judging by the number of listings there are, there is a good supply of investment properties available at present.
It is my considered opinion that if as a property buyer or seller, you relied on the monthly QV reports and figures, you'd have a sure recipe for a very shakey financial future indeed. I think it is scandalous that the picture they present is well out of date, and it is only after everyone else already knows the market has turned to custard,do they finally come up with the same conclusion. I suppose whoever leads the organisation gets paid $150K or so for producing this unreliable data. Statistics...ha
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The next week is likely to see lots of news on what’s happening with house prices around the country.
