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Battle of boffins and buyers
Friday 22nd of August 2008
In previous Blogs I have commented on the Mexican stand-off between vendors and purchasers when it comes to house sales.
It’s clear both groups have had quite different ideas of what a property is worth and for a while never the twain shall meet. I’m wondering now whether there is a similar sort of stand-off between the so-called experts and the people on the ground.
The experts tend to be people like university boffins and economists who are really good at doing what I call the quantitative analysis; look at data and then make predictions and conclusions. No doubt there is a wide variance amongst these people on how much hands-on contact they have with people in the marketplace.
As a general comment these experts are the ones who get quoted in the press making, what looks like bearish predictions, that the housing market will fall by massive amounts. Naturally they get the headlines and their thoughts become common wisdom.
On the other side are the people who get down and dirty in the property market each day. These are the investors, the real estate agents, property finders and the like. It seems to me, anecdotally, that this group has a contrary view to the experts.
Sure some of the comments, particularly from real estate interests, are overly optimistic.
I’m starting to come to the view somewhere in the middle of this and sense that maybe the housing market has taken the most of its beating and will now stay “flattish” for a while.
What’s making me a little more positive than the experts? A couple of pieces of information released, such as the ASB Housing Confidence survey and the REINZ numbers help. But also some work which we have done with Landlords.co.nz asking property investors what they think has been useful in forming this opinion. Details of this work will be released next week, but it is showing that there is starting to be more interest, if not activity, from people wanting to buy rental properties.
While one commentator has been brave and suggested that the market has turned, I wouldn’t go quite that far. Rather the house price fall has moderated.
Time will tell whether the experts or those on the ground have got it right.
It’s clear both groups have had quite different ideas of what a property is worth and for a while never the twain shall meet. I’m wondering now whether there is a similar sort of stand-off between the so-called experts and the people on the ground.
The experts tend to be people like university boffins and economists who are really good at doing what I call the quantitative analysis; look at data and then make predictions and conclusions. No doubt there is a wide variance amongst these people on how much hands-on contact they have with people in the marketplace.
As a general comment these experts are the ones who get quoted in the press making, what looks like bearish predictions, that the housing market will fall by massive amounts. Naturally they get the headlines and their thoughts become common wisdom.
On the other side are the people who get down and dirty in the property market each day. These are the investors, the real estate agents, property finders and the like. It seems to me, anecdotally, that this group has a contrary view to the experts.
Sure some of the comments, particularly from real estate interests, are overly optimistic.
I’m starting to come to the view somewhere in the middle of this and sense that maybe the housing market has taken the most of its beating and will now stay “flattish” for a while.
What’s making me a little more positive than the experts? A couple of pieces of information released, such as the ASB Housing Confidence survey and the REINZ numbers help. But also some work which we have done with Landlords.co.nz asking property investors what they think has been useful in forming this opinion. Details of this work will be released next week, but it is showing that there is starting to be more interest, if not activity, from people wanting to buy rental properties.
While one commentator has been brave and suggested that the market has turned, I wouldn’t go quite that far. Rather the house price fall has moderated.
Time will tell whether the experts or those on the ground have got it right.
Comments (4)
Chris Donkin
I think that the market still has a way to go down, as there are plenty of unrealistic vendors still around who had purchased in the hype of the market. 10-15% drop still seems very realistic at this stage or the rental property market will remains as good as dead until rental returns move dramatically upwards, unfortunately there also appears to be an oversupply of rentals due to mum and dad investors trying to get some return on properties they cant afford.
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16 years ago
Hamish Patel
Yeah cash is king right now, everything points to the market getting a lot worse, right now unless we undergo some major changes as an economy and as a world.
<br />
<br />We have an aging population unless we turn this around by importing some people we will be in a situation about 10 - 20 years from now where the pension disappears and people have to sell their houses to survive. Till then we also have a down turn in the economy which will surely lead to less income. Less income will mean less income tax which was one of the drivers of the buying spree. Avoiding tax.
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16 years ago
Philip Macalister
Simone, not sure where you are coming from here. Firstly I have no idea what Richmastery's barrow is, therefore would be incapable of finding it let alone pushing it.
<br />My comments are an interpretation of what I am seeing and hearing in the market.
<br />I think of it a little like managed funds and the sharemarket. There you have two investment approaches. One is to buy the market (ie: index funds or passive management) and take what "the market" delivers. The other is to take a more active approach and pick stocks that you identify as winners.
<br />With residential property I put investors into the active category, as they are out there looking for deals no matter what the market is doing.
<br />On the other hand some of the boffins - or analysts - look at the market as one big mass and talk of it all moving one way or another.
<br />In this current, rather changed environment this leads to two quite separate camps which seem along way apart. My take on this is that reality, as it often is, is somewhere in the middle.
<br />The Landlord.
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16 years ago
Jeremy Jones
Bit tricky to pick exactly when the market will pick up again. But there are many positive economic forces coming up soon which may well boost prices: upcomming tax rebate/s, people who have been in Kiwisaver for one year can take a holiday, petrol prices easing, dropping interest rates etc. Also spring will be here soon and hopefully some better weather (more will go house hunting when its not rainy or dark). I think the outlook is positive. Main thing supressing the market is NZ pessimism - and parts of the media.
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