Is your glass half full or half empty? With commentators lining up to predict the gloomiest possible scenarios for our economy we thought we’d put some water back in the glass.
The media pundits are quick to take the chicken little point of view: “Help! The sky is falling!” And sure, we have high interest rates, petrol and food are expensive and the housing market is in a “slump.”
But offsetting all of this gloom we continue to enjoy a kick-arse natural environment, our population continues to grow, we produce food for the world (for which there will always be demand), we still have near-full employment, and now we have a free trade agreement with China.
The long term prospects for New Zealand are excellent! So think of the next two to three years as taking a breather.
Yes, house prices have stalled – and they needed to. However, predictions of 30% price drops are headline grabbing and irresponsible sensationalism.
Some properties will drop by 30% as the result of forced sale – death, divorce, or debt. Who will be hardest hit? Highly-geared property investors, some property developers and apartment owners who bought off plan at inflated prices. The other 95% of property owners will sit it out, maybe a little uncomfortably, until interest rates fall.
Long-term property remains an attractive investment – our economy is fundamentally sound and we have population growth.
There are a lot of similarities between property and shares. Our human psychology is to buy near the top of a cycle (I’m missing out) and sell near the bottom (panic); better known as greed and fear. The media plays to this psychology – because greed and fear sell papers and make for compelling TV.
Ignore the media and view every deal on its merit. You are far more likely to find great deals today than any time over the past two years when property was going gangbusters. This is the best buying market in two years!
