For anyone who has battled addiction and won, you will know it is best tackled one day at a time. A time frame longer than that is often too hard to fathom or comprehend.
So, what do the current property market and recovering from addiction have to do with each other?
There is little point trying to predict what the property market might look like in the short to medium term. If we’ve learnt anything over the past six months, it’s that the future is entirely unpredictable. Sitting here today without a play book to refer to, tackling it one day at a time appears to be the only approach. In our last barometer we asked the question: are we in the eye of the Covid storm? Despite this, we were as surprised as anyone when less than a week after we published it, Auckland returned to level three lockdown. Now if I was a betting man, I would have taken a gamble on the negative impact this would have on their market. As it turns out the market continued to transact without skipping a beat. Take the Ray White Remuera office as a wonderful example. On the morning of lockdown, they pulled forward eleven auctions to pre 12pm and managed to sell ten of them under the hammer. The following week, under full restriction, seven homes sold under the hammer, all above reserve. One reached a great price after 136 bids! The ability to continue trading is because of robust online systems developed during the first round of restrictions. Just why the public isn’t suffering from the jitters is anyone’s best guess.
Why is this time different from the GFC?
Remember those scenes in Greece of people lining up to withdraw money from the bank? The banks had to impose a daily withdrawal limit of 50 euros to avoid running out of cash. This time liquidity does not appear to be an issue. This is therefore different to our previous market upsets, and the only run we appear to be having is on toilet paper and flour.
What do the banks think?
We’re hearing finance is increasingly hard to secure. Banks are taking a more cautious approach to lending with significant due diligence undertaken on anyone keen to borrow. Just this week one of our buyers, a small family with two stable professional jobs, was turned down for new lending because of childcare outgoings. Another sign of risk aversion on the banks behalf is the rise and rise of valuations. This indicates concern regarding a potential market dip. But despite the advice of the best economists in the country, the banks have no more certainty than anyone else and as such may be relying on the old Donald J Trump ‘gut feeling’ method. Either way they hold the purse strings so whatever their gut says goes.
Is there any point predicting?
It’s not the first time I’ve discussed the human desire to predict outcomes. But why is it that so much effort is put into speculation? My take on it is that it’s a bit scary to admit we really aren’t in control. So, prediction with conviction feels like we are taking back the reigns. But watching the market on a daily basis isn’t good for the health. Loss aversion adds to our already heightened level of stress. Real estate has always been a long game and time in the market is kind. So, unless you intend to sell now or in the next year or you are trying to time the market, give yourself a break and understand what will be will be
The Wellington Market
2.5% fixed interest rate – enough said! Money is cheap if you can get your hands on it and this is one of the major factors driving the mini boom we’ve been experiencing post lockdown. At this stage Covid has done little to rain on the market’s parade so if you are wanting to sell and trying to time the market, now is great!
Normally the Wellington market takes a pause in the lead up to the election but not this year. Politics appears to be taking a back seat to the real estate market in 2020 with many people seeing the result as a foregone conclusion.
Wellington Market Quick Stats:
What’s on this September in Wellington?
Digital Nights Wellington – Van Gogh Alive, Odlins Plaza Wellington Waterfront, 28 August – 30 October 2020
An outdoor debut of the world’s most visited multi-sensory experience celebrating the world’s most famous artist, Vincent van Gogh
Reid & Ruins, The Opera House, 111-113 Manners Street, Te Aro, 26 September 2020
Fellow songwriters & long time friends Nadia Reid and Hollie Fullbrook (from the band Tiny Ruins) are hitting the road together in the Springtime for ‘REID & RUINS’ – an 11 date tour across Aotearoa, where they will play songs from their respective albums – solo & together.
Kids Night Walks at Zealandia, Waiapu Road, Karori, 16 July – 26 September 2020
Experience the sights and sounds of ZEALANDIA at night! Kids’ Night Walks are a fun and adventurous experience for families with younger children (minimum age 5) to witness the nocturnal species that only come out at night.
If you, or anyone you know, could benefit from a considered market assessment by Wellington’s only licensed agent and registered property valuer, please do not hesitate to call. We are always happy to help.