Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Charles-Drace On Falling House Prices

Charles Drace, CFP

Certified Financial Planner, author, lecturer

This is a comment on the current slump in residential house prices. My recent book predicted the slump and I have a recommendation for the many thousands of New Zealanders who have invested in the housing market.

The backgrounder has more detail, but I make these key points: - The slump is likely to last several more years. - Investors should now be deciding whether they can ride out a prolonged market slump and consider selling soon if they can not.

The slump may offer opportunities for buyers as it matures is a few years.

Historical trends suggest we still have further downwards corrections to cope with.

It's imperative that people develop a strategy to cope with falling house prices - immediately!

"Don't put off dealing with falling house prices - the problem won't go away," says Charles Drace, CFP, author of the popular 1998 book, `How to Avoid the New Zealand Residential Property Crash.'

In his book, Charles Drace made some recommendations of ways that homeowners and property investors could limit their losses. Recent news reports have confirmed that the downwards correction is continuing with a massive 12.5% drop in house prices in the last quarter.

One of the recommendations was for bank managers to meet with borrowers and develop a strategy for a falling market.

"Now that the property correction is accelerating," says Charles Drace, "those recommendations become even more important."

Previous researched cycles in history suggest this correction could knock about 40% off the real value of all residential real estate over a six year period. As we're two years into this cycle, homeowners and investors must act now.

If selling your property is the best option - do it now. If you're prepared and able to hang on to your property, plan on prices falling for a further two to four years and taking another six years or so to return to current prices.

If you want to buy property, wait for three to four years for prices to come down to a reasonable level. It's virtually impossible to make any return out of rental property if you buy when property is as overvalued as it is now.

In his book Charles Drace proves that over time residential property never increases in real value any more than inflation.

In the recent Reserve Bank publication, "The Real Story" Reserve Bank Governor Don Brash is quoted, "In reality, the inflation-driven capital gains of the past have come to an end." Now is the time to re-think your investment strategy if it includes property.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Watch This Space: Mahia Rocket Lab Launch Site Officially Opened

Economic Development Minster Steven Joyce today opened New Zealand’s first orbital launch site, Rocket Lab Launch Complex 1, on the Mahia Peninsula on the North Island’s east coast. More>>


Marketing Rocks!
Ig Nobel Award Winners Assess The Personality Of Rocks

A Massey University marketing lecturer has received the 2016 Ig Nobel Prize for economics for a research project that asked university students to describe the “brand personalities” of three rocks. More>>


Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>


Half A Billion Accounts, Including Xtra: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>


Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news