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Investors creeping back into property market

Investors creeping back into property market

Investors are starting to creep back into the market all over the country as prices soften, First National New Zealand says.

First National General Manager John Stewart said a survey of the network’s members throughout the country at the end of June showed investor inquiry was the highest in three months and sales of properties priced below $250,000 made up to 95% of some offices sales.

“Mum and Dad investors may have lost confidence but serious property investors are definitely back ‘sniffing around’ in increasing numbers, buying selected properties which, in most cases, they are subsidising on a weekly basis, although only to a minimal extent.

"Investors are the first ones to leave the market and the first to return, so this level of enquiry is an encouraging sign.”

It was not just the cheaper houses selling.

“We are seeing low end properties and more high end properties selling. The dairy payout-driven market is still booming and we are seeing rural people investing in holiday homes, particularly in Marlborough and the Coromandel.”

The most difficult position to be right now seemed to be the middle of the market, especially trying to sell one of the many houses under five years old located in a relatively new subdivision, Mr Stewart said.

“There is a burgeoning concern that the middle family market of relatively new homes of mushroom colour or brick with tile roof, will be even more affected due to the sheer weight of numbers on the market.

“For example, in one Christchurch subdivision, there have recently been more than a dozen very similar houses for sale and within $30,000 difference in price. Which one, if any, will sell? The person with a desperate need to get out.

‘People seem to be buying established houses in school zones, it’s the subdivisions that are suffering. I don’t think there is a large enough number of people wanting to or able to fund the mortgage to allow them to move into those subdivisions unless interest rates drop significantly.“

Highlights from regional survey of First National’s offices:

o Investor activity in Northland picked up two months ago with a significant increase in activity as investors took advantage of prices dropping to the lowest in several years.

o 95% of our busy West Coast offices sales in the three months to June were each under $250k.

o June in Golden Bay saw our offices selling almost double June 2007 sales.

o Strong enquiry for ‘cheap do-ups’ in Te Awamutu.

o Sales are up considerably in Palmerston North region with almost 40% of those sub $250k.

o South Auckland still seems to be slumped with prices having dropped to June 2006 levels, around a quarter of sales under $250k and volume still low.

o First National’s Christchurch offices sales were higher last month than June 2007.

o In Alexandra, lifestyle blocks are selling well.

o In Marlborough properties were generally selling strongly with also a lift in holiday homes interest.

o Hawkes Bay appears to be one of the hardest hit regions, though Manawatu and Kapiti Coast are similarly tight.

o Apartments have come in for bad press. We are finding at least in the lower and middle end of that market, and in the holiday centres, that sales are occurring albeit at very discounted rates. High end apartments appear to be sitting still everywhere.


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