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Property Market Hesitancy Brings Opportunity

Property Market Hesitancy Brings Opportunity

By Kieran Trass

The "Auckland Property Clock" reveals that the Auckland property market Boom is yet to peak.

We are still in a paradoxical market with expectations of increases in values but also hesitation by cautious purchasers not wanting to pay too much for properties in Auckland. This is reflected in lower sales volumes in parts of Auckland but this has not yet been reflected in sale prices overall. In the next few months if sales volumes remain soft then vendors will eventually reduce their expectations and prices may look like they have peaked... This may result in some exceptional opportunities for property investors over the winter months.

Buyer interest appears to have waned slightly for several reasons:

1) We are nearing the end of the summer months. 2) We are starting to consider the potential negative impacts on Auckland’s economy of “losing” the America’s cup. 3) We are still coming to terms with the huge lift in values over the last 12 months. 4) The full impact of the “ripple effect” is still to be felt in some parts of Auckland.

But there are still far too many positive signals indicating we will continue to enjoy rising property values in the medium term (providing the fundamental drivers of the market remain positive).

These drivers include (but are not limited to). # The fundamentals of adequate return on investment still being evidenced. # Solid net migration although this has now peaked. # Low unemployment levels (14 year low). # Relatively low interest rates (Average rate is now @ 7.0%p.a.). # The potential for interest rates to fall is looking likely. # Further upward pressure on rents is still evidenced. # Confidence in the real estate market remains high although appears to be waning. # Continued high level of building consents. # Low home ownership level. # Inflationary pressures look set to increase before reducing.

In the short to medium term there will continue to be some great opportunities in this market for astute purchasers whilst confusion continues over whether or not right now is a good time to buy property. But still expect pressure on values in the next few months whilst investors hungry for more property increase their property holdings whilst they can still buy fully self funding property.

You should make sure you only buy property that has adequate cashflow to pay all expenses incurred by owning the property. You can still buy properties that meet this criteria in the majority of suburbs in Auckland. Remember to be selective, don’t just buy any property for the sake of owning another property!

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