The deadly descent: Ben’s Barometer June 2016
It has been said that climbers who choose to scale the mighty Mt Everest actually face the most danger on their descent. In the minds of many, successfully scaling the summit is the goal. But, the relief of reaching this milestone can cause a lack of focus on the return to base camp. The same holds true for the NZ property market. With many areas of the country, including Wellington, showing strong growth, people are starting to think they need to get in or fear missing out. That is all well and good while there are gains to be made. But, like the summit of Everest, everything has a peak or at least a levelling. So, how do can you best manage the descent safely until the next climb?
Don’t overlook maintenance. It is very easy to put off repairs and maintenance while the market is climbing. This is because buyers will place less consideration on the cost of fixing issues while they can offset that investment with capital gains. It is when the market slows, however, that maintenance becomes an issue. Up until the middle of 2015 it was not uncommon for Wellington buyers to price large items such as re-roofing, painting and re-piling into their offers. And that was if they were willing to offer on properties like that at all. For shorter hold properties, such as first homes, large and costly repairs were often the difference between a successful sale or not. The inability for first homes to turn over has a flow-on affect to every other sector of the market.
It’s important to remember that when a market is climbing – it’s the land value or air space (in the case of apartments) that is increasing and not the structure of your home. Stay on top of maintenance, so, if you have to sell you can do so whatever the state of the market.
The liquidity of the property market is heavily dependent on the banks and their appetites to gain market share and profits. When the economic forecast is good, banks will actively compete for your business. But don’t be fooled. Banks are fair weather friends. When times are bad, be prepared to have your messages go unreturned. Our advice to weather the storm is to befriend your personal banker in the good times, because when the ship starts to sink you may just need to rely on a spot in their life raft.
I mentioned a couple of months ago that the reality today is not the reality tomorrow. Only a few years ago it would have been hard to find an economist that could have predicted the current interest rates. In fact all indications pointed to interest rate rises on the horizon. A small move in rates can quickly add up. Make sure to factor in the potential for hikes when investing in property so that you don’t get caught short. A good mortgage broker can be invaluable when it comes to tackling these types of questions. Feel free to touch base if you would like a recommendation.
The Wellington Market
For those of you desperate to secure your next home or investment, you may be wondering where all the listings have gone. Stock levels have been low for some time now and this coupled with falling days on the market indicate that the current climate is probably here to stay. At least until the stock levels increase. The big question is how much growth is left is this current upswing. And that is anybody’s guess.
Wellington Property Quick Facts
June 2016 Fun Facts
With the All Blacks VS Wales test in our sights, and a new captain named to lead us into the future, we thought it timely to do a final hurrah to Richie..
- Of the All Blacks’ 413 victories since 1903, McCaw has been on the field for 32 per cent of them – 131 wins in black to be exact.
- Richie has scored 27 tries for the All Blacks, putting him 13th on the All Blacks’ all-time list.
- He has played 37 tests against Australia, the most by one player against an opposition. Only six of those were defeats.
- 3 is the number of times he has been awarded World Rugby Player of the Year.
Thanks for reading this month’s barometer
If you would like a professional opinion on the current market value of your home, please do not hesitate to book your FREE appraisal with Ben today – Wellington’s only licensed agent and registered valuer.