We are fast heading into the greatest correction our housing market has seen.
Are you ready for it?
Savvy investors and market watchers certainly took advantage of the coming situation over 2020/2021 and even the first quarter of 2022 selling out at record highs. All cashed up and waiting to catch the margins over the coming summer months, whilst others sat back watching the headlines and hoping.
Let’s take those rose-tinted glasses off for a minute to look at the situation for what it truly is.
House prices rocketed, as did the share market over the 2020/2021 period as the printing presses rolled out all the stimulus. Unfortunately, what many people failed to remember is that if we drop a load of printed currency into the market, it deflates the value of our dollar.
In short, all imports are costing us a lot more.
So it begs the question – how does that affect the housing market?
Put simply, when printing stopped, our currency was left devalued so that all imports cost more, and inflation started. (I say ‘started’ because there are some looking at the situation hopefully thinking that this is a short-term issue and in the scheme of 100 years – yes, it could be considered short-term). However, we have other policies at play which means we are at the start of the situation – not the middle or the end.
Moreover, mortgage rates will continue to rise as long as inflation is on the march. We are about to step into scenarios that have international economists calling unchartered territory. To combat inflation, The Reserve will lift the official cash rate to curve spending and decrease demand, however, in the housing market, the destruction comes for those who have recently brought and coming off low mortgage rates and finding that their monthly costs could almost double as it stands.
Small property investors running rentals who held on at the start of the rate hikes have had hard times renting out properties they have lifted rents on to cover the extra costs and we saw a number of these properties come to the market over the last few months coupled with those still looking to cash in on 2021 sales figures and yes in certain areas and a certain style of houses they are holding their value and even increasing but overall if you are looking for the best price possible and thinking of selling within the next few years NOW is the time.
A house is an asset, but in these times if you’re not smart, it could be a liability if you are overstretched especially as things increase in price over the next year and lending costs are kept high. For those needing to sell to downsize their debt, it’s a case of ‘if you snooze you lose’ only the losses can be big. Many people decided Spring and Summer is the best time to sell their property, note the word ‘many’ and let’s unpack what this means to the market.
Many properties are about to be added to the market over Spring and Summer and with fewer buyers able to secure finance due to rates knocking out affordability there will be a lot more houses for the buyers to pick and choose from. Those who saw this coming and were prepared stand poised and ready for the market correction and have started re-entering.
The great news is, we are not alone. Every western nation is suffering the same fate and with our NZD almost down the drain compared to all other developed nations, it means we are seeing the internationals showing interest again in NZ? Does that mean we will see huge growth from International buyers like it was when they first started investing in NZ property? Not quite as they are suffering as well however it does mean those immigrating to NZ selling up from their own country have money to spend on housing although it offers an extra lift for a number of buyers.
When will this climate end? Unfortunately, we are just stepping into it! If we look over to the stock market analysts and the finance sector and what international issues across all fiat currencies are facing through the fractional reserve banking structure, some are tipping this to last up to a decade, so short-term fixes are not looking feasible.
It is not all doom and gloom, though, as mentioned savvy investors and property owners saw the writing on the wall back in 2020 and are cashed up ready to spend if the price is right. Then there is the retail crowd from the share market who have taken a bit of a pounding of late looking for a secure place to park their money. Housing is an asset if they are picking it up for the right price.
The added plus is our entire monetary system is centred around producing debt, if debt by way of mortgages is slowed too much then the banking system itself is at risk so at some point in the near future they will make lending easier and easier to keep the debt machine rolling.
So is it a good time to buy and sell?
It’s always a good time to buy, as long as you keep within your means when it comes to the repayments and selling. If you struggling now then Yes – 6 months ago would have been a better time to downsize that debt, however, waiting could end up becoming more and more painful and costly the longer you wait. Waiting for everything to get better could end up being the straw that broke the camel’s back.
So what to do if you need or want to sell?
Position yourself with an agent and team who can make your property shine against the rest, clever marketing will be needed to push your property in front of all others when it comes to appealing.
If your situation is that you are looking to downsize or you are looking at cashing out at the very best price then I invite you to contact me to see what a combined 45 years of media and marketing experience myself and the team have to offer as a point of difference.
It’s free, there is no obligation and we will go through the processes and options available for you to make the best-informed choices for you and your family.
Contact Paige to get started with good advice and a clear road map towards a successful sale.