1 Interest Rates
Interest Rates are at their best for years.
Banks are starting to look for business again. Banks have slackened the belt when it comes to demanding a 20% deposit.
2 Building Consents / New Residential Contruction
Building consents are at a three decade low.
CHART – BNZ Weekly Overview 3rd September 2009
Land prices have stabilized so as I have noted in my monthly sales reports here, we have seen a flurry in recent times of local sections being sold.
Just this week Statistics NZ has informed us that…..
For the first time since 1989, when this series began, the seasonally adjusted volume of residential building work put in place has fallen below the volume of non-residential building work put in place. The volume of residential building work is usually more than 20 percent higher than non-residential building work.
With our friends across the ditch just starting to come out of their slowdown……
….and seemingly picking up speed quickly, it will only be a matter of time again before tradespeople see the glow of Ozzie dollars and take off for the quick money, reducing our ability to meet any upsurge in local demand.
Tony Alexander, BNZ Chief Economist had this to say in his Sept 3rd weekly report…..
In the year to July the number of dwelling consents stood at 13,954 which is the lowest since the 1960s and 38% down from a year earlier. On average NZ needs about 23,000 new dwellings to be built to accommodate average population growth. We will get back to that level maybe toward the first half of 2011.
Remember the press you’ve been hearing about PLT’s, immigration dept talk, and how many Kiwis are staying here and not traveling overseas. Let me be the first to tell you, just in case you weren’t sure, this not traveling O/S, is for a Kiwi, just not normal!
3 Families with School Age Children
If you are after a family home, then be aware you will be competeing with other family oriented buyers. Don’t leave your run too late if you have school age children.
Often a buyers most important criteria…..moving in and settling down in the new area has to be completed long before Xmas, and definitely all in time for the new School year. Wait til November to buy and it might not be a pretty picture.
4 Prices Stabilizing
Even Treasury have joined the believers.
Back in May they thought home prices would still have another 10% to drop, witness this weeks talk from them saying that they were a bit optimistic on this one. Keep a close eye on regional variations here.
I for one am not happy that the new REINZ / Reserve Bank stratified price index lumps us in amongst the “Rest of South Island.” That places us in with areas such as Queenstown, whose pricing movements over the last year or so in no way reflect what was been happening in the “Top of the South.” Mix that in with the West Coast, general Otago, Southland and you just have too many variances.
Infometrics recently came out with predictions home prices could rise something like 25% over the next 3 years, and when prices start to rise if you haven’t already guessed it, we are one region that experiences it first. Maybe in 5 years the commentators will look back at the years from 2009 to 2011 and call it the “Rugby World Cup effect.”
5 Reduced Overseas Competition
The NZ dollar is in a high period when compared, specifically with the UK, USA and Australia. Based on past experience, these three source countries make up the majority of new residents to our region. It is no longer as financially attractive for many in these places, or those in the Kiwi ex-pat community, to look to buy a NZ property.
Once they convert their $$$ across to NZD they can’t help but recall them “good ole days” when the pound used to buy NZD$3. Look to take advantage of this lack of “cashed up” overseas buyer competition. Over that 2002-2004 busy period prices in sought after or coastal locations increased dramatically, and many point the finger at overseas buyers fueling that.
However if you are looking at commercial property then there is increased competition from Overseas investors/buyers who, frankly, see NZ commercial as a bargain right now.
6 Desired Location
Remember as I have been mentioning here many times lately Stoke, Nelson did come through this “home price crash”, in the strongest position as a single suburb out of the whole country.
That should indicate to you that once demand returns in a “big way” it will also go just as well, so indeed now is a great time to buy in Nelson. NB: the photo above was not taken in our region.
7 Employment Factors weighing upon…
Local and region specifics need to come into your equation. Nelson has always been about the 3 “F”s, fishing, fruit and forestry.
The local employment situation is certainly different compared to when the NZD$ was around USD$0.55c.
At that time Kiwi exporters were reaping the benefits of a lower currency. This time around we are having to live in an environment where those same exporters, and there are lots locally, are “hurting.”
There is a bit of a double whammy here for local exporters because of the global economic situation…….reduced demand from all quarters, so local exporters are not only having to take less $$$ in a currency sense, but also shut down any extra over capacity that at one time, a short 5 years ago, they invested in because it was desperately needed, plus they still have to deal with the bank. In other words there may be folk who are selling because they have to, not because they want to. This type of environment usually results in prices not being “over -inflated”, being much more realistic alongside more advantageous selling timeframes for cashed up buyers.
At the end of the day its always about personal choice. However if you are looking to find that “perfect” time to buy, it might not ever come, but I can say that at the current time it does look like the planets are in alignment in more ways than one.