I see changing market’s everywhere I look. Reports from Wellington describe buyers being more judicious and increasingly tentative. Priced properties are attracting lots of interest but some Tender dates are coming and going with no offers being received. Meanwhile there are 51% more houses on the market in Auckland than there were this time last year, and buyers are harder to come by. Suddenly agents are chasing everyone who steps foot in their open homes 🙂

This is all leading some to believe we may be arriving at 1-2pm on the good old property cycle clock:

Before we jump to conclusions though – real estate markets can be strange, and this slowdown has been partially bought about by artificial means (read: 40% LVR restrictions for investor buyers). Most people thought the Auckland market would tank in 2015, but they turned out to be wrong. Plus – looking at the clock above, where is the abundance of tradespeople going to come from?

One more note: The 51% increase in property on the market has just taken us back to the levels we were seeing a few years ago:

Source: interest.co.nz

Check out the difference in property available for sale in Otago & Wellington right now, versus 2014!

GRAPH OF THE WEEK:

Are we at the top of the mountain? Or just pausing for a breather?

Scary stuff, isn’t it! Any rational person would look at that image and say we are teetering on the edge of a big property bubble hangover. We’ve partied all night but now it’s 3am in the morning, everyone has gone home and we’ve got work tomorrow…

Cue: Massive come-down.

So, with these 2 pictures in mind. Wouldn’t you have to be crazy to look at buying a house right now? Especially in Auckland?

The problem is we aren’t rational, we’re human. And for most of us humans, life decisions are about a lot more than just money.

For example:
Where is the best location for having kids?
Where will you have the most support from friends family?
How far do you want to commute to work each day?
If I’m paying rent, isn’t that just ‘dead money’?
Would you like to be close to family?
Is there a viable alternative? (eg. renting / living with parents)

Over-riding all of this is a burning desire to ‘nest’. To have a home of your own to which you can do anything you want. Your piece of the world which no one can kick you out of.

When there is un-certainty in the market it is easy to start questioning the decision of whether to move.

Will interest rates go up? Will the election cause a drop in prices? Am I better off waiting till next Summer?

Timing the market is extremely difficult. No matter where we are in the cycle, you can always find people who are saying the market is due for a correction, and then others who say that with low interest rates and high migration numbers, the market will likely keep on slowly rising (or flatten out for a while).

The key question to ask yourself is this:

How long do you plan to own the property?

As long as you plan to own your home for at least 3-5 years, you hopefully shouldn’t need to worry about timing the market. Especially if you buy in an area primed for population growth.

Do your research to make sure you are paying a fair price. Visit at least 15 – 20 homes in your target area before you buy and check recent sale prices against your estimation of value before you attend any auctions.

Talk to your mortgage broker too and make sure you could still afford the repayments if interest rates were to go up 2 or 3% over the next 5 years. No one knows for sure if they will increase but it’s always best to plan for the worst and hope for the best.

Don’t let paralysis by analysis stop you from moving forward with your life.