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Why Are Aucklanders Obsessed With Real Estate?

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Brian Dalley
Brian Dalley

Why are Aucklanders seemingly tripping over each other to invest in real estate?  An interesting analogy but one I am not buying into.

I am seeing a different picture emerging and one that I hope becomes apparent to Dr Brash, as an unwarranted increase in interest rates would not be helpful just now.

After the real estate market self adjusted during the rescission, the quick rebound in property sales and prices caught some off guard.  Many were not expecting a spike of that magnitude however, when one-steps back and looks at facts rather than just the statistics it is easy to see and understand what drove the spike.

For the first time in about three maybe five years properties in Auckland had become affordable for the first homebuyer. Over capitalised property investors quit stock to pay down debt and suddenly all the ingredients for success were on the table [low property prices, low interest rates, affordability].

I remember reporting at the time that it was one of the better if not best times to invest yet everyone just sat around waiting to see who was going to go first. I guess heading out of a rescission one would expect caution. All the same, it was weird, a little like watching runners line up, the start gun goes off and no one moves.

When people finally realised it wasn’t a false start it was game on [ there was a ton of affordable stock on the market ] they left the starting blocks at speed in an attempt to cash in while they could, this creating a flow on effect which resulted in the spike I spoke of earlier.

But at some stage [and this applies to the country as a whole] there will be a lull as the market noses ahead of affordability.  The festive session could well be the beginning of that lull as retailers fight for survival and tempt people to indulge themselves a little.

Will the rest of the country follow suit? To a certain degree but it is dangerous to generalise so a property blog in each region is being set up to monitor movements to which we believe will be many and varied over the next 12 to 18 months

Would it not be wise then to wait until next year before buying/selling?

I see very little to be gained from waiting unless you believe prices are going to fall even further. If you believe that, you are one of the minorities.

Regions south of the Bombay could very well experience a similar spike in sales as Aucklanders head south in search of affordable stock and not only just Aucklanders. We get enquires from around the world.

Will the proposed implementation of property taxes put and end to that?

Not going to happen, it may slow down those in it only for the tax benefits but for those that what income producing assets it will have little or no impact.

I wouldn’t say Aucklanders are obsessed with real estate anymore than other New Zealanders are. Hamilton and Tauranga have already stepped up to the plate so watch this space.

Brian Dalley is a leading Property Consultant | former NZMBA Mortgage Broker, and Real Estate Agent. You can read more of his views and opinions on his website

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