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Property bubble

Property bubble

The problem with any market bubble is that by the time you realise it’s happening the pin is only a short distance away from popping it. So what is a property bubble? The tell-tale sign is when the wider population starts investing/ speculating on the property market. Previously these buyers will have shown little to no interest in property investment, but as the media hype reaches a fever pitch and stories of success become urban legend, these people decide to acquire property too. If we take a look back to the previous nationwide boom, it seemed if you weren’t investing in property you were being left behind, and once the first sheep goes through the gate, the others are bound to follow. I remember being at a meeting and someone was telling me that they had just purchased five houses in Greymouth returning 10% for less than $500,000. They had also forecast growth of approximately 10% per annum for their now substantial portfolio. If that same person approached you today and bragged about the same property conquest, I’m sure you would consider having them admitted! Funnily enough, up until recently the six o’clock news focused on the rise and rise of Auckland house prices, but it would appear that the tide has started to turn with the latest reports being that of empty auction rooms and unrealistic vendor expectations.

The Wellington Market

Like any market, the property market reacts to forces that can swing the pendulum, such as interest rates and lending requirements. The biggest effect that these changes have had of late, is the time that properties are spending on the market. The current average days in Wellington are 41.8 which is up from 34 days in late May. We live in an instant world and when things don’t happen right away we tend to hit the panic button, but keeping calm and having a plan which is reviewed to reflect market changes will increase the chances of success.

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Average days to sell 41.8

Average Sale price $536,300

The biggest movement has been days to sell which have jumped up by almost 9 days

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