In the past on this blog I have accused the media in general of self serving sensationalism when it has come to reporting the state of the property market in NZ, and the likely path that this market will take in 2008.
Well now is the time to come out and say congratulations to Esther Harward, the feature writer of today’s headline story on the Sunday Star Times entitled “Snapshot of a Property Slump“. The article is balanced and factual, it is unemotional and as someone who has been paying close attention to this market place and commenting on it on this blog in posts such as “Will 2008 see house prices rise or fall?” “Is NZ facing an impending property crash?“, I can say I agree 100% with the article.
NZ is in a property slump. That word is well chosen – it is balanced.
We are not in the midst of a crash. We will likely see a more subdued market than we have witnesses over the last 5 years. Some properties in some areas of the country will experience price falls. Others will be able to hold a steady price at a much slowed sales pace; whilst as the article states others will be havens of opportunity which may well see some inflation pegged growth. The net impact of all this through the year will be shown in the aggregated median price and total sales both falling – the article estimates prices by as much as 10% – that is possibly quite likely; taking last months median price down from $340,000 to around the $300,000 level – the kind of levels last seen in early 2006.
The NZ property market is not one market but many thousands of markets, each with their own characteristics, drivers, demands and appeals. However all are impacted by universal issues such as mortgages and the economy. The latter is becoming more critical every day as rates continue to rise. The Reserve Band is currently hesitant as to whether to hold these high rates and risk the dollar’s spiraling appreciation and consequential “crash landing recession”; or whether to loosen rates as the US is currently doing and in so doing allow inflation to become unchecked. A tough call as ever for Alan Bollard.