Ray White offers advice to investors
Media Release March 2008
Ray White Group Hands Out Annual Awards and Offers Advice to Investors
At a challenging time in the New Zealand market, the leading realtor the Ray White Group is rewarding its best performers and offering some timely advice to existing and prospective Kiwi property owners.
The 2008 Ray White Performance Awards were handed out at a gala dinner at SkyCity, with long-time leading agent Lesley Hawes of the Kingsland office named Salesperson of the Year. The runner-up was Don Ha, whose Manukau team also received the Office of the Year award.
With new data showing a marked decrease in housing loans applications attributable to high interest rates following a series of hikes in the official cash rate in 2007, combined with decreasing rates in homeownership and a widespread easing in growth of property values, Ray White Group CEO Carey Smith said a bigger adjustment in price than had been seen in the last two months was potentially yet to come.
Statistics just released by Quotable Value NZ showed a decrease in residential property values nationwide for the three months ended February compared with the three months to January, while the Real Estate Institute reported the number of house sales hit a seven-year low in January 2008.
Mr Smith said there was a softening underway, but that whatever was happening in the market, someone would benefit. “People who are upgrading are going to get a discount and be in a better position, while those who are looking to downgrade are subject more to market conditions.”
His view is that the biggest issue for property investors at present is New Zealand’s interest rates, the highest in the OECD. “For people coming off five-year, or even two-year, fixed-interest rates, they’re facing an increase to 10% from 8% or less – in real terms, that’s a 20% increase in rates as they refinance, which puts real pressure on people who are marginally capped.”
It’s a good time for people in the market to reassess their own situation and their long-term views, he said, and he expects many people to ‘hold and see’. “Ninety-four percent of people sell and re-buy, and there’s no downside in doing that, but people do tend to look at their cash situation right now rather than their future. What you should do depends heavily on your circumstances – I would say to an owner-occupier in the mid-market in Auckland that they should be taking a conservative position.”
However, Mr Smith expects some easing will come with the decrease in interest rates he expects this year – due to election-year promises if nothing else – which would fuel confidence.
Other trends he expects to see? “All the socioeconomic decisions people make – putting off families to buy a home, or staying in rented accommodation for longer – and we’re also seeing more parents giving deposits to their children as first-home buyers. The internet has also had a huge effect. People will move into the market and start looking online about three months before they see an agent, and they’re well-researched – they know what they’re after.”
Regardless of the current flurry and the possibility of a proper slump, Mr Smith said as long as New Zealand is considered a safe country the property industry would always be terrific. “We have one of the fastest-turnover property markets in the world – Kiwis are very thirsty for it, and a lot of wealth has built up in property, which will keep driving the market forward. People will move away from property only if the banks do, and banks prefer to lend for property over other investments because it’s less volatile.”
Arguably the most controversial issue the sector is confronting is the Real Estate Agents Bill. The Bill, which would replace the self-regulating Real Estate Institute of New Zealand (REINZ) with an independent authority, faces widespread resistance from real estate agents, but Mr Smith sees it as a necessary move. “It’s good that we’ve got regulation coming so it won’t be a case of agents controlling agents any longer. It will simply be an adjustment – ultimately there are many deeper things that could affect the industry than this one change.”
About Ray White Group
The Ray White Group is a family-owned business which, since its formation in Australia in 1902, has been well regarded for its impeccable level of service, experienced and dedicated staff and commitment to training and support.
With an annual sales turnover of more than $20 billion, the Ray White Group provides a broad range of real estate and related property services.
Ray White NZ has 141 offices
trading $6.5 billion annualised property sales.