There have been a few interesting articles of late about the state of the market and what we may expect to lay before us over the next few years .
A description of the market today by one of our active commentators as being at ” dismally low levels ” started me thinking and a little research into the stats indicates that although the volume is nowhere near all time highs ,its not too bad either .
Since Jan 2000 to August 2009, the average monthly sales volume in Aucklands’ Eastern Beaches has been 245 sales/month. The highest volume was in Sepr.03 at 435 and the lowest was Jan. 1992 at 93 sales for the month. (Jan 1992 to date the figure is 231s/m.)
The figures since May 2004 give an average volume of 228 sales/month. The Last 6 months since March have given an average volume of 221.5 s/m, not indicative of a boom by any measure but hardly dismal and certainly not a slump.
Is this a sustainable level? I do think so.
I accept that unemployment is high, may go higher, and that property is unaffordable to a large section of our population, I don’t accept that will automatically result in the lowering of prices. Excepting lack of any free choice, Kiwis simply hold on to their homes and wait out the storm as they have been doing.
Mortgagee sales are, and will be, increasing given the time all the processes take but that is no surprise given the incredible excesses of the 05/07 period. There will continue to be well funded, lowly geared investors to pick up good properties, young couples who have saved a deposit in the old fashioned way, people who can obtain collateral guarantees and of course immigrants – all of whom can buy.
In the blog “The myth of affordable Housing “I detail the reasons that I believe make it impossible for there to be any meaningful drop in house prices or increase in affordability of property. In fact, as time passes, I believe a diminishing percentage of our traditional homeowners will be able to own property and that the property they will be able to aspire to will not attract them. Such property will not be located in neighbourhoods they wish to live in, will not contain the amenities considered to be necessary to support life and will not be zoned for the schools they seek to send their children to . These are the long term rental tenants of the near future and will be the engines that drive the rental investments of those that can buy.
Added to the Deaths, Divorces, Debt, Marriages, Upward and Downward mobility, immigration and the like, I see little reason to expect significant change. We have seen worldwide turmoil and plagues over time but we seem to muddle on through and enjoy good lives. Given we are working our way through a perfect storm and are not yet out of it I do not advocate recklessly increasing debt (interesting to see the Phoenix like rise of the property spruikers and their seminars) but I maintain that if residential investment is part of a well planned and budgeted retirement plan, this is not a bad time to buy.
Similarly, if you happen to be looking to a longer term and can afford to buy, do so. Interest rates will rise and fall over time; definitely they will rise from current levels, all the commentary agrees on that. Prudent rather than exuberant optimism is the order of the day and whilst it will definitely cost money and sacrifice to take part in the property market I do believe that the cost of not taking part will be far higher.
September 29 2009 01:58 pm | Uncategorized