Looking ahead to 2019, what will happen in the property market?
The biggest hurdle seems to be buyer confidence right now. There’s a fascinating contradiction in New Zealand right now where we’re extremely lacking in confidence, despite plenty of evidence suggesting we should be feeling happy.
Why are buyers feeling so nervous? I think these are some of the reasons:
- Uncertainty about new regulations and taxes – a lot of investors want to wait and see what is decided before buying.
- Horror stories from Australia’s markets - values in Australia’s eight major cities lost an estimated $36 billion in value this year. That makes for scary headlines, yet so far there’s been no signs that New Zealand is following suit.
- The fizz is out of the market so it no longer seems like you’re going to miss out if you don’t get in right now. Property is less fashionable than it was two years ago.
- Public sentiment has been strongly against landlords for about five years.
However, any smart investor knows that these are also great reasons to buy. You can get a deal that makes you look like a risk-taker right now and a genius in 10 years’ time. Look at the positives:
- Vacancy levels are low and not likely to increase considering the reduced rental pool.
- Interest rates are low, also not going to change, according to the Reserve Bank.
- It’s a buyers’ market and you have loads of time to do your due diligence and get a great deal.
- Overseas student numbers remain high.
- Rents are stable, prices are down, so yields are improving.
I believe that by mid-2019, investors will start realising there’s nothing wrong with the market and hopefully begin to feel more confident. Come on New Zealand, don’t look so worried, you’ve got a lot going for you!
Read the rest of Aaron’s colum here