The property market in New Zealand is no longer going from strength to strength – far from it in fact. Leading economic experts are predicting something of an impressive crash in prices, and already this is having a knock on effect with many vendors withdrawing their homes from the market rather than face the fact that they will have to take lower than market value offers if they want to sell.
Compounding the fear in the market is the fact that inflation in New Zealand is reaching record highs and it is becoming effectively more expensive to afford anything which is making fewer people keen to take on mortgages. This too is frightening people away from the property table! All in all it’s bad news everywhere you look for the property market in New Zealand.
The Governor of the Reserve Bank of New Zealand has just left interest rates unchanged in a country which is trying to balance out rising inflation and resultant consumer dismay with falling house prices and real estate market panic. And it doesn’t look as though New Zealand is actually managing to keep things on an even keel. Far from it in fact…
According to the Reserve Bank’s latest predictions, house prices are set to fall by about 22% from their peaks last year once you take the rate at which they are falling into account with rising rates of inflation. This could see as much as NZD 80,000 shaved off the value of the average house price in the nation! That is no small sum of money!
Taking on board this fact as well as the fact that the bank has done nothing to encourage borrowers by leaving interest rates unchanged, vendors of New Zealand property are apparently withdrawing homes from the market so that they do not have to face the fact that their house is falling in value. Only the desperate will be willing to risk falling prices, under market value offers and negative equity on top of inflation levels that are on target to hit eighteen year highs in New Zealand.
All of this spells fiscal disaster for the real estate landscape in New Zealand – at least for the short term whilst they get their inflation under control, their interest rates down a bit and some confidence back in the market.