Miriam Bell Stuff senior business journalist joined me for an interesting clip. Obviously predicting the bottom is impossible. The best we can do is know how far we have come from the top. And to consider if there are some natural floors.
How far have we come?
If we look at the stats, you could feel like around 10% from the highs. However on the ground in Auckland if I think about some of the contracts im seeing, it feels like 15%-20%. When looking at things at a high level however you can miss some of the detail. There are certain properties that have less love than others. If we think about larger sites, they have probably seen some big swings over the past four years. This could be due to less development funding around currently. Central city apartments probably are dragging some of the stats down for that suburb, they have been hit hard with the student and visitor markets shut down.
New builds still have some support through lending rules. However it will be interesting to see what happens if the RBNZ relaxes rules for low deposit buyers for existing properties as a reaction to a crashing housing market. This is something that could be tempting as an alternative to lowering interest rates(inflation inducing).
Remember im not an economist, these are just mere feelings.
Where is the bottom?
Lets not kid ourselves money has changed its meaning, its not so easy to put the cat back in the bag. We have clients ready to move into the market waiting on the sidelines waiting for prices to make a march upwards before they join in. Why? We are pack animals, I reckon. There is comfort in company. This may lead to the settling of prices interrupted by a small rush up, as some of those buyers actually need to make a move.
Stagflation is a time of subdued growth of the economy accompanied with prices heading up. Sound strangely familiar? That because I have never seen it in NZ but you might feel like its happening. Mind you I have been in the industry for only a few decades.
So with inflation in wages and material costs, for some areas there might be a floor to the prices. If you are getting land and an old house in some cosy town for the same price as it costs to build a new house, well there is the floor I reckon. No one is predicted the price of a hammer and nail to drop.
Are we at the bottom? Your bet is as good as mine but for some properties it certainly feels like you can pick them up for less than what you will insure them for.
