Now Is The Time For Bargains
1 January 2016
Experienced property investors are getting ready to score a deal in the Auckland market. The city’s house price growth has slowed, prompting speculation it is entering a period of downturn.
Westpac chief economist Dominick Stephens says, "There can now be no doubting that the erstwhile star market has suffered a fall from grace."
He says seasonally-adjusted Real Estate Institute data shows house sales fell 13% in Auckland in November, following a 17% drop in October.
House prices fell 1.9%in November after a 4.4% fall in October, taking them below July levels. New Zealand Property Investors' Federation executive officer Andrew King says that could worry some new investors.
“They might be thinking now they have to have a 30% deposit, the prices are tanking and you can’t get a decent [rental] return, they might look to other parts of the country or not do anything at all.”
But he says experienced investors would know there were opportunities to be found.
King says supply and demand is still out of balance in Auckland, but the level of housing affordability is still better than it was at the peak of the last property cycle. If the heat had come out, it would be an opportunity for investors to make lower offers on properties they had their eyes on, he says.
“They may be thinking they may be able to pick up reasonable bargains at the moment.
A lot of people, if they can’t get what they want or need, they will take the house off the market because most don’t really have to sell.
But a few do and experienced property investors will be trying to find those people. They’ll help them but they’ll do it at the right price.” Stephens says he does not expect house prices to continue to fall but he says it is unlikely the market will return to the frenetic pace of earlier in the year.
Part of the slowdown has been blamed on Chinese buyers retreating from the market. Squirrel Mortgages actuary and business development manager Joanne Chen says there was a dramatic change when new rules were introduced in October, which require overseas investors to have an IRD number.
But she says over the last month Squirrel has been very busy with a number of pre-approvals for Chinese buyers, though none were yet making offers. She expects they will return in force in February, after Christmas and Chinese New Year.