The Unconditional Blog

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Archive for the ‘Money Matters’ Category

5

A clearer view of mortgage broking in the US may help kiwis better understand the subprime meltdown

Posted on: June 29th, 2008 | Filed in International, Money Matters

It has long perplexed me to fully understand how a sophisticated monetary and financial system, so tightly regulated could come so unstuck as to facilitate the near collapse of the financial markets not just in the US but also globally through in part the subprime meltdown.

House and moneySure the US had been benefiting from an unbridled run of economic growth and perpetuating the model of the classic “land of opportunity” – but to see how loans could be written to people who had no requirement to prove the status of their income or assets (more likely liabilities) always staggered most people (at least in hindsight) and then to see that these new borrowers could be offered “low start mortgages” with rates half of what the flexible lending rate was at the time only could have resulted in one possible outcome – something the world has come to better understand over the past 12 months.

Well an enlightening piece of the puzzle is very neatly exposed in this excellent blog post from Jack M. Guttentag professor of finance emeritus at the Wharton School of the University of Pennsylvania. The post on Inman News entitled “Transparency is king in U.K. mortgage system” sets out to explain for a US audience the key differences of the UK system of mortgage broking from the US approach – for NZ the model of the UK is almost exactly the same as here in process at least.

The most enlightening perspective for me is the fact that whereas here brokers earn commission by managing the process of “selling” mortgages offered by a large number of banks and financial institutions where the lender is transparent in the offer of a mortgage rate which the broker resells.

In the US by contrast the brokers effectively package up mortgages sold to them at a wholesale rate adding their margin to then offer this to buyers. This process means that truly 2 brokers could offer the same mortgage to the same borrower sourced from the same financial institution but packaged up at different rates especially as these rates may vary for each of the years of a loan. Some may well say this is facilitating a true open market, whilst other may see unscrupulous ambition driving inappropriate behaviour.

The rates offered by lending institutions to brokers are not disclosed to the public, but are the closely guarded jewel of the mortgage broking fraternity. Based on this understanding it becomes clearer as to how the gulf between those that borrowed and those that lent became a chiasm through which so much risky debt was written and then resold with those who financing the debt not having any clear idea of the circumstances of the borrowers.

Not wishing to draw simplistic generalisations, this explanation provided by Jack M. Guttentag does at least demonstrate that the risks that created the heart of the subprime debacle in the US could not have been executed in the same manner in NZ due to the fact that the fundamental process of mortgage broking is so significantly different.

4

Mortgagee mansions! – the truth is somewhat different

Posted on: June 8th, 2008 | Filed in Media commmentary, Money Matters, Regional News

The front page article of the Herald on Sunday proclaims – “Mortgagee Mansions – rich pickings as the wealthy are forced to sell”- well it certainly grabbed my attention this morning as I am sure it did for countless other folk as they sat down to learn yet more about the fall out of the global credit crunch.

The article upon closer reading seems to be full of “shock and awe” but equally a lot of people saying “we don’t have that statistic or this statistic” – yet despite that the article claims that the fall out in the housing market is being felt more noticeably than many thought at the top end of the market.

So with the benefit of the fact that this website is the most comprehensive real estate listings website in NZ (currently with over 108,000 listings of which 79,000 are homes for sale – a clear 35% more listings than any other website) I thought it would be of benefit to look into the current 250 mortgagee listings on the site to see how close to the truth the article in the paper is. Of the 250 listings – 206 are homes, 13 are lifestyle properties and 31 are sections.

Firstly Bernard Hickey’s comment in the article that the most pain is being felt in Auckland is absolutely right, with more than 50% of all mortgagee properties being found in Auckland. Although to put it in perspective there are 106 which as a segment of the current 16,181 homes for sale in the region is actually only 0.7% or 1 home in every 153 homes.

Excluding Auckland the remaining 100 homes are spilt across the rest of the country in a fairly even distribution – the South Island has 36 or 0.3% of all homes for sale; and the balance of the North Island excluding Auckland has 64 at the same 0.3% of all homes for sale.

The only areas of the country to come close to the Auckland level are Bay of Plenty, Canterbury, Central North Island and Manawatu / Whanganui – all showing around 0.4%.

In terms of pricing the facts paint a vastly different picture to that of the newspaper article. There are just 10 mortgagee properties being marketed with an indicative price over $1m. As a proportion of the 4,538 properties currently for sale across the country with this level of asking price they represent just 0.2%. On the other hand the average price of all mortgagee properties on the site is $378,000 – well below the average price as reported by REINZ for April which was $427,000 (note this is the average price, not the median price).

Clearly the bulk of the properties subject to mortgagee sale today are in the sub $400,000 price bracket – 158 of them representing 0.9% of all properties in this price bracket.

So with the benefit of a little more research the newspapers could have provided a little more depth of information to assist their readers be better informed about the property market – but then as they say – why let the truth get in the way of a good story – especially when it can grab headlines to sell newspapers!

0

Are cars and holidays more important than your mortgage?

Posted on: June 6th, 2008 | Filed in Money Matters

Whilst the news yesterday that the Reserve Bank is to hold the official cash rate at 8.25% held little good news for homeowners the outlook certainly points to the rate beginning to come down towards the end of the year.

Reserve Bank - June 08 Effective mortgage rateHowever as was shown in the full Monetary Policy Statement the effective mortgage rate as shown in this graph is likely to rise over the coming 18 months to around 9% as a large component of fixed rate mortgages come up for renewal at today’s rate of the low 9 percents.

It is therefore timely to highlight some interesting and sobering research published earlier this year from both the UK and the US showing how relatively little time homeowners spent researching home loan options.

In the UK research from January of this year undertaken by the financial services website (www.fool.co.uk) reported that consumers said they spent around 5 hours on average researching for a mortgage with just 1 in 5 spending over 10 hours, this compares to the average of 9 and a quarter hours spent researching a holiday with fully 1 in 3 spending over 10 hours researching for the 2 weeks in the sun! As the article highlights whilst researching a mortgage may not be as exciting as the prospect of a holiday – the repercussions of not planning your finances properly could be as much as $7,500 per year.

Over in the US it is clear that the home of the automobile still drives the American psyche with a similar research undertaken by Zillow showing that Americans spend around 8 hours researching the purchase of a car as compared to the similar 5 hours spent researching for a home loan. This research also showed that the same consumers said that they spent 10 hours researching a home improvement project and 5 hours researching a vacation.

Mortgage Advice from Realestate.co.nzClearly spending that bit more time investigating the options for buying or refinancing a mortgage is the right thing to do. To help you in this process we here at realestate.co.nz have partnered with a specialist mortgage advisory service to offer free mortgage advice -all you need to do to get advice and help to see how much a mortgage might cost or a refinance might save you just click on the “Mortgage Advice” link on every property listing on the site.

3

Applying for the government’s shared equity scheme will resemble a lolly scramble

Posted on: May 18th, 2008 | Filed in Buying / Selling a home, Money Matters

I believe that this pilot scheme for between 500 and 700 second mortgages to assist first time home buyers will be wildly oversubscribed. The result will potentially resemble the share floats of the 80’s and 90s’ as the scheme is likely to appeal to not just genuine first home buyer, but to anyone keen to help out a family friend or relative and make some fast capital gain whilst saving on mortgage payments.

The lolly scramble for a part of the NZ governments shared equity schemeI am not being cynical or attempting to make a political statement, I just want to highlight a potential for the best of intentions to end up benefiting those who would not be classed as the key target.

Let me explain. The scheme has criteria for eligibility as outlined in this newspaper report. The applicants must be first time home buyers earning less than $85,000 as a household income and must have a 5% deposit. They must live in the home.

So let’s take our fictitious couple John and Mary. They are looking to buy their own home – they live in Wellington and have a household income of $83,000. They have a $13,000 deposit and want to buy this 2 bedroom unit in Newtown for $255,000 house. On the face of it (and on the application form) this couple are a perfect candidate. However the reality is not so close to the truth. Mary’s father is a property investor, he has lent them the deposit after he found out about the scheme. Mary and John have no desire to live in the unit as they rent an apartment in the CBD – but having had all the details explained by her father Mary is happy to apply for the loan. Once purchased the couple have friends who will rent the property.

So what benefit can Mary and John derive from the scheme as opposed to just buying the property with a single mortgage?

Taking this real example, assuming the unit is purchased with a government loan of 20% of the value with the balance being from a 9% interest only mortgage for 3 years, and in that time the property has a capital appreciation of 10%. The benefit at the end of 3 years of having the government scheme will be a lower capital gain ($33,800 vs. $39,000) – however this is more than offset by a saving of over $14,000 in mortgage payments over the 3 years.

Whilst there is no doubt that property is significantly more unaffordable than it was 5 years ago, schemes such as these are always going to attract investors as there is no way without extensive and costly beaurocratic screening you can guarantee that the people you want to help will be the ones that are helped. The property market is a free market economy and trying to intervene through protective schemes will more often than not attract unintended consequences, so whilst I do not wish to condone such activity I could not blame you if you got your application form completed pretty damn quick and joined the queue.

20

NZ property market may well see a brighter outlook sooner

Posted on: April 10th, 2008 | Filed in Money Matters, Real Estate Industry

Some of the best debates on this bog have come as a result of discussions centered around the prognosis of the future of the property market in NZ. I have for the past few days been listening to podcasts and reading news article from international sources to endeavour to get a read on the longer term outlook for the NZ economy in general and NZ property market in particular. I have deliberately been avoiding the local media.

My take on what I have read and heard leads me to a belief that we have become far too introverted and are in danger of becoming the victims of a self fulfilling prophesy. The analogy I would draw is to an amusing incident that I recall was reported in the UK many years ago. At the time BMW had just introduced their econometer on the dashboard – a driver was stopped having brought a major highway to a grinding halt as he had become so fixated on this gauge, measuring his mpg; in an effort to maximise his economy that he forgotten that the consequence was he was driving at around 15kmph!!

Let’s examine some key facts – the health of the NZ property market is a function of the health of the NZ economy and affordability of housing is a function of the price of property and the salary levels of those looking to buy property. The “recession” or pseudo recession that is afflicting the US is a function of over exuberance, it is placing major constraints on the credit market. The sufferers of this are largely the consumer and not business. As I have heard business globally is performing exceedingly well making significant profits and in the case of US companies exceedingly good profits as so many of these companies are now significant exporters who will reap huge benefits from the low dollar.

The other major economies of China and India as well as Russia are all performing well; less so from export (although for Russia the oil and other commodities is their golden goose) as from significant domestic consumption which in the case of China is actually sucking in imports helping to balance their trade imbalance. The estimate for the growth of China is 9.4% and India 8% – both down on prior years but on the scale of their economies these growth rates equate to enormous growth in absolute dollars.

So what of the NZ economy in all of this. Well if you look at our trading partners you only need to look at the focus of the NZ business community who are in China this week to not only celebrate the signing of the FTA but to cement their already well established trading relations. Australia, our biggest trading partner is according to this economist report from the IMF predicted to continue to grow at a rate of 3.2% in 2008 and 3.1% in 2009, not far off the 3.3% average of the past decade. If our key trading partners are growing at these rates and we have the products from our agrarian economy to meet their need we should be able to tick along nicely for the next few years.

And let us not forget that we are not a solely agrarian economy – look for example at the super yacht industry, whilst it may not amount to more than a $100m a year industry to NZ it is globally riding high – this article in Time magazine highlighted how the $25 billion industry is being driven by the super rich of not the US but emerging markets. The statistic that grabbed my attention – there are over 85,000 people nowadays who have over US$25 million or more in liquid assets! – and this group is growing. To this elite group a super yacht from Alloy yachts is exactly the way to celebrate global success, and for NZ another demonstration of the skills of our yacht builders.

So what of the NCIER survey? Well to me it feels very much like the traditional survey response – when asked in the context of the global credit crisis and a protracted and severe economic downturn in the US – people focus on the econometer and take the foot off the gas pedal and before long there is a long line of gloom merchants stuck in the middle of the road!!

Now this greater confidence in the NZ economy to withstand these global shocks and continue to grow exports bodes well for business. That in its self will not solve the issues of affordability which does drive the property market. We will see the expected stagnant property market, off at least 50% in sales and coupled with this highly volatile prices. Considering all of that I would not be at all surprised that as we head into 2009 we will not be pleasantly surprised by our balance of payments and our companies strong profitability; which coupled with tax cuts borne of greater tax receipts from continued high employment and corporate earnings may well be significantly bolstering the take home pay of most of NZ thereby beginning to reduce the affordability gap.

Anyway just my take – as ever your thoughts would be of interest to debate the issue.

1

Slower property sales not affecting all sectors equally

Posted on: March 16th, 2008 | Filed in Money Matters, Real Estate Industry

The property sales stats released this week by REINZ showed a total of 6,356 sales for February 2008, representing 3,000 less homes sold in the month as compared to February last year. The figures for the rolling 12 month total show a 17% decline from a high of 104,675 in the 12 months to Feb 07 to just 86,720 for the latest 12 months.property price segments in NZ

However as ever behind the numbers lurk very interesting trends. The key one that caught my eye was the segmentation of sales by price band. The fact is the top end of the market is not suffering as acutely as the sub $400,000 sector. This was interestingly intimated in a Herald on Sunday article today which focused on some high end developments which show continuing demand.

The sales stats by price has only been reported by REINZ since mid 2005 and shows the price bands of (i) less than $400k (ii) $400k to $600k (iii) $600k to $1m (iv) $1m+.

The fact is that whilst there has been a 17% decline in overall sales across the country comparing a rolling 12 month period, the high end sector has continued to enjoy growth. Each sector tells an interesting story.

$1million dollar plus properties: Over the past 12 months this sector has seen a 10% growth with 2,725 properties sold. Whilst representing just 3.1% of all properties this sector has grown from less than 2% in 2005. Over the course of the the past 12 months an average of 227 properties over $1m have been sold each month in NZ .

$600,00 to $1million properties: Over the past 12 months this sector has seen the fastest growth at 11% with 9,735 properties sold. This sector of the market represented 8% of sales a year ago and today represents 11% of sales.

$400,000 to $600,000 properties: These properties are above the current median price of $337,500, however their sales represent nearly a quarter of all properties sold in NZ in the past 12 months, and have shown a volume fall in sales of 5%, less than that of the total market.

Property below $400,000: This sector is the largest in the market, in the past 12 months 53,357 properties of this value were sold – a significant fall of 25% in sales volume compared to 12 months earlier. It can clearly been seen that this sector representing slightly less than 2/3rds of the market is were the real weakness is.

The data provided in the REINZ stats does not go as far as to identify median prices per price band (maybe this could be of value to industry observers). However one means of looking for a surrogate for such information is to look at average sale price vs. median price. Clearly the median price currently at $337,500 is showing early signs of falling this year, however the average price of all property sold in NZ as reported by REINZ is actually holding reasonably well, with a figure of $415,744 for the month of February. The graph below shows the tracking of median vs average for a 3 month moving average for the past 2 years. The upper blue line is average sale price, whilst the lower red line shows median prices.

It would be safe to say that the gap is not closing, adding weight to the view that the weakness in the NZ property market is primarily at the bottom end.

reinz-average-vs-median-price.jpg

4

Mortgagee sales statistics continue to show property hunters searching for a bargain

Posted on: March 11th, 2008 | Filed in Buying / Selling a home, Money Matters, Website searching

Property seekers in NZ clearly feel that in today’s buyers market there are bargains to be had and the rich pickings will come from mortgagee sales. That is why the #1 search term on realestate.co.nz in the past week has been mortgagee – beating long term favourites pool, villa and furnished (as in furnished apartment – I guess?).

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I cannot claim credit for this logical analysis of search terms – I was drawn to it by Bernard Hickey who writes an excellent blog on Interest.co.nz. The blog covers a wide range of financial issues of which mortgagee sales have captured his readers interest. He has responded by creating the “Mortgagee Index” at the suggestion of one of his readers.

This index measures the number of listings on both realestate.co.nz and trade me property that feature as “Mortgagee Sale” properties. As at the 3rd March, Bernard had a level of 167 listings; up from 154 the week prior. To assist him in monitoring this index I provided not just the number of listings on our site with the word mortgagee or mortgagee sale (as at today 149), I also provided data on the number of searches undertaken on our site by people searching for these types of properties. Here is the latest data.

During the last 7 days the #1 search term used on realestate.co.nz was mortgagee recording 705 searches in 7 days – this amounts to 3.7% of all searches over the past week. At this time last week the term mortgagee was also #1 recording 1,646 searches over the prior 14 days – amounting to 3.8% of all searches over that period.

Similar terms capturing interest were mortgagee sale #59 with 50 searches and urgent #143 with 31 searches.

Other big searches being made on the site:

  • lifestyle #9 with 223 searches in the past 7 days, a huge increase from 0.6% to 1.2% of all searches
  • queenstown #13 with 126 searches in the past 7 days, increasing from 0.5% to 0.7% of all searches
  • beach #8 with 224 searches in the past 7 days, falling from 1.5% to 1.2% of all searches
  • pool #3 with 430 searches in the past 7 days, falling from 3.5% to 2.3% of all searches

So clearly it looks like property searchers are hunting out that mortgagee bargain whilst sadly accepting that summer is over and it’s time to think of the escape from the city to the lifestyle section!

16

Property purchasing options: co-buying and fractional ownership

Posted on: March 9th, 2008 | Filed in Buying / Selling a home, Money Matters, Property Investing, Renting

The emerging wisdom of the crowd is clearly saying we are about to witness a significant correction to the housing market. (As a point of note the phrase wisdom of the crowd comes from the title of James Surowiecki’s excellent book which I coincidentally have recently read and would thoroughly recommend).

If it is any consolation – we are not alone when it comes to the property market hitting the wall in NZ. Most developed countries are to a greater or lesser extent are either about to witness this correction, or are deeply in it!. The only question is when and by how much, this useful chart from The Economist presented on Lance Wiggs blog shows the scale of some of the European property market corrections.

Whilst property is for some people a speculative investment from which to earn incremental income and establish a passive asset for retirement, the majority of home owners buy property for the pleasure of ownership and the very primal need to shelter themselves and their family.

As an option renting a property can and does meet this need. At this time there are clear arguments that renting is cheaper than buying. When you stack up mortgage repayments as well as repairs and maintenance and compare that to rental costs the incremental costs can be over $17,000 per year. However the downsides such as surety of tenure, inability to make the place your own and the thought of paying someone else’s mortgage still drive well over 60% of NZ’ers to own their own place.

Conventional wisdom always sees property purchase tied to the “nesting” mentality driving people to buy when setting up home with a partner. So with relatively low affordability the question for many is how to get on to the property ladder. Looking to trends overseas it shows that there is more people choosing for deep pragmatic reasons to buy property in partnership with friends and business partners as a means to take that first step on the ladder.

Naturally wherever there is a good idea involving the aggregation of interested parties around a shared need the web intercedes with smart functionality – this has proven to be the case with co-buying property. This concept has spawned a thriving business for a couple of UK based entrepreneurs who have taken their learning in facilitating the meeting of prospective co-buyers from their UK base to offer the service here in NZ as well as Australia and Canada. The NZ version of Co-buywithme has been operation for about a year and has over 500 members from all areas of the country and all walks of life; some looking to co-buy a first home, others looking for a shared ownership in a holiday bach; whilst others see the opportunity to explore investment property. As ever the web creates the facility for anonymous interaction – it is then up to individuals to make the buying decision, the parallels with online dating could not be more similar.

Utilising the same model of shared ownership, when people hear of fractional ownership they immediately think “time-share”. That concept may have slipped in the credibility rankings from the 1990s, but the idea of a more permanent holiday escape without the exposure to high property prices has seen this emerging segment of fractional ownership emerge over the past 5 years.

Fractional ownership is perfectly targeted to the “never-grow-old” mentality of baby boomers who fancy having a holiday home for more than a couple of weeks a year. Fractional ownership allows between 2 and 5 owner to collaborate in the purchase of a property with joint ownership rights to the title which can be sold independently and in so doing divide up the access to the property into meaningful time periods. There are a growing number of such properties being marketed in NZ’s vacation centers offering the chance for overseas buyers to grab a slice of NZ summer partnered with a kiwi family enjoying the winter activities, thereby allowing each to enjoy the benefits of a quality property for half the equity and half the mortgage and also half the appreciation in value (in time – potentially!).

41

NZ’s Property slump – compelling facts cannot be ignored

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.

sst-headline-2-mar-08.jpg

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.

35

Is NZ facing an impending property crash?

Posted on: February 17th, 2008 | Filed in Buying / Selling a home, Media commmentary, Money Matters, Property Investing

As has become the norm over the past 12 months the newspapers and TV are cluttered with articles prophesying impending doom as NZ property teeters on the brink of a property collapse – the questions is – are the reports and prophecies going to become self-fulfilling or is rational sanity going to prevail?

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The facts are very clear, the property market has slowed significantly and prices are not rising as fast as we have been accustomed to over the past 2 or 4 years. However it is a fact that over 5,000 properties were sold in January so clearly there are people looking to make that step and buy property, equally there are over 57,000 properties currently advertised on this site (There are currently 53,300 homes and 9,600 lifestyle property listings on the site, within this are multiple listings of a single property as properties being sold by more than one agent are advertised separately) – clearly this indicates that there are sellers looking to move for whatever reason.

It is a well known fact of any market, be it property or shares or any commodity that in-spite of the trend there will always be buyers and sellers entering the market for differing reasons, it just may well be that the current property market is more interesting to seasoned professional investors with ready finance who are keen to seek bargains rather than a year ago when it was more likely to be less well informed opportunist seeking to “jump” on the property band-wagon.

A couple of articles have sighted the rise in the listings of mortgagee sales on websites, this is true for realestate.co.nz. Currently we have 100 properties featured as “Mortgagee Sale” – a year ago we had 63. Does that mean that we are seeing a 60% increase in the prevalence of mortgagee sales? – there is no statistical proof. Mortgagee sales happen all the time for many reasons and whilst there is no doubt many property owners (not necessarily home owners as the properties concerned may be speculative investment properties) are suffering under increasing debt it is not close to the scenario in the US. The situation in the USA was driven by the most lapse of financial systems and fueled a mega-surge in new property development which is mostly where the pain is being felt right now.

Rather than look to the US for the prediction of where the NZ property market might end up, I think it is better to examine the UK market as the picture there is surprisingly similar to NZ – possibly a few months ahead of us.

UK house prices fell for the third month in January by 0.1% to 180,473 ($451,200) (as stated in a recent Bloombergs report), however they still show a 4.2% increase over this time last year (NZ year on year prices are up 3.97%). Already interest cuts are being predicted of between 0.25% and 0.5% over the next 6 months as the credit crunch has impacted on the economy as a whole and property in particular.

Despite this situation, the UK market is predicted to see prices to drop by around 5% in 2008 – a realistic picture given credit tightening and the current trends. This I would judge to be a rational prediction rather than the NZ snake oil merchants parading as property market experts who talk of 25% falls in prices. The UK property market is underpinned by the same foundations as the NZ market – their economic outlook remains strong, demand for property far outstrips supply and they have low unemployment. Just last week the Royal Institute of Chartered Surveyors stated :

“In the near term, the housing market will continue to be shielded from significant price falls while employment conditions are strong”…”if mortgage lenders filter the recent interest rate cuts into the market, demand should begin to increase”.

For NZ we face continuing high interest rates, it is unlikely that we will see cuts in these rates until the 2nd half of the year when there will be a fierce competitive battle again as large component of fixed term mortgages come up for renewal, this however will be in the middle of the election campaign which traditionally is a slow time for property sales.

So as ever interpreting all this information is difficult as just with Lotto if we knew the future we would win every week! – however it is realistic at this stage to say that the indications are for a very slow property market in 2008 – sales well down on 2007; with the likely hood of property prices of property ending the year at or just below the levels today.

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