Big week for housing market looming
Friday, March 5th 2010, 3:55PM 
2 Comments
Next week is shaping up to be fairly a interesting one for the housing market and where it is headed.
It’s not quite the big bang – that’ll be May 20 when the government unveils its new taxes in the Budget.
Rather, next week we see the latest house sales data from QV and REINZ, plus we have the next Official Cash Rate announcement from the Reserve Bank.
Anecdotal evidence we are hearing is that the housing market has slowed considerable, especially amongst investors.
There have also been reports floating around that a good number of investors are saying enough is enough. Let’s sell before the government destroys the market effectively taking away property investors’ retirement savings.
However, others are sitting tight waiting to see what happens.
The OCR announcement is a critical event to watch. While we are not expecting the governor, Alan Bollard, to increase the cash rate (like his counterpart across the Tasman did this week), we will be watching for a strong steer on where rates are heading. Or more precisely, we know they are heading up, we want an idea of when and how steeply they will rise.
There will be a point where borrowers enjoying these wonderfully low floating home loan rates will have to make a big decision. Stay floating or move to a fixed rate? If it is the latter, the question becomes what term?
At the moment it looks like the shorter duration loans – out to around two years – will be the ones to go for. Longer term loans look pretty expensive right now, even though we have seen some decreases in the past couple of weeks.
So next week will be one to watch. While the data and news isn’t likely to spark huge amounts of activity, it will be fundamental information needed to plan future moves in the property market.
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Comments from our readers
On 6 March 2010 at 8:45 pm Craig said:
I'm selling up I think that we are going to see quite a fall this year :/ On 8 March 2010 at 12:11 pm rob said:
yep...i'm baling out too.
i think the much predicted " crash' is just around the corner so i'm selling up my portfolio and heading to the sidelines for a future time...don't want to be the last man standing when the lights go out?!
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