SMH Online has reported that property inventories in NZ appear to have bottomed. The weeks of sales inventory has fallen from a peak of 50.2 weeks in June 2008 to 31.5 weeks this June 2009. This need not translate into higher sales, but I believe it has. We bought our place in November 2008, which we think was the perfect time to buy because of the calamity on financial markets. We bought from an old couple in their 70s who probably thought we were looking at another Great Depression.
Insofar as market timing is concerned I believe buyers will have another opportunity to enter the NZ property market. I would also suggest that city properties have further to fall. I would not be buying city property at this time. My advise is to buy under-loved rural property if you must, as we did. We bought a lovely Victorian home in a small 40,000 town reasonably close to Wellington for $NZ78,000 ($US40,000). Since then the exchange rate has recovered and we believe the property has found a floor in this segment.
The next opportunity will come with city property, but not until people are squeezed by higher inflation. The property market is highly leveraged, and NZ is worse than most countries in this respect, which means great opportunities. Such issues are discussed in our Buying NZ Property report.
I don't want people to read too much into these inventory numbers because people are only going to sell at the top if they think the market has a lot more to fall. Buyers in rural areas will have recognised a bottom and pulled their property from the market. Buyers in the city will mostly be thinking their home is a long term investment, that it no longer makes sense to sell. That does not mean prices will not fall more. It just means people cannot see the inflationary outlook. Clearly that is going to impact on employment, interest rates, and the average over-leveraged home owners capacity to pay off their mortgage.
Insofar as market timing is concerned I believe buyers will have another opportunity to enter the NZ property market. I would also suggest that city properties have further to fall. I would not be buying city property at this time. My advise is to buy under-loved rural property if you must, as we did. We bought a lovely Victorian home in a small 40,000 town reasonably close to Wellington for $NZ78,000 ($US40,000). Since then the exchange rate has recovered and we believe the property has found a floor in this segment.
The next opportunity will come with city property, but not until people are squeezed by higher inflation. The property market is highly leveraged, and NZ is worse than most countries in this respect, which means great opportunities. Such issues are discussed in our Buying NZ Property report.
I don't want people to read too much into these inventory numbers because people are only going to sell at the top if they think the market has a lot more to fall. Buyers in rural areas will have recognised a bottom and pulled their property from the market. Buyers in the city will mostly be thinking their home is a long term investment, that it no longer makes sense to sell. That does not mean prices will not fall more. It just means people cannot see the inflationary outlook. Clearly that is going to impact on employment, interest rates, and the average over-leveraged home owners capacity to pay off their mortgage.
