Friday 12th of December 2008

I was hoping for an early Christmas present in the shape of a strong housing market over November. Sad to say though, that the numbers out from both QV and the Real Estate Institute this week were a bit sad.

Depending who you listen to the market is bottoming and could even be showing a little bounce. Maybe the first tentative signs of recovery.

The big issue though is the one of volume. The number of sales is still tiny compared to a year ago and this is what is really hurting many people in the industry.

I would have thought that falling interest rates would be creating more activity in the market. Maybe it is just too early to see it, as it takes time for the deals to come through and be reported.

Likewise the argument that banks have tightened up their lending criteria isn’t likely to be showing through either.

It’s unlikely we will see them next month, as December is traditionally the lowest and slowest month of the year. People are more focused on other things (parties, presents and getting all those jobs done before the year is out).

If one is looking for a ray of hope in the residential property market it is this: Prices haven’t fallen as far as some commentators have predicted. The latest numbers could be a plateau. Only time will tell.

There are signs that support the market such as interest rates, increased affordability and tax cuts. I would argue that as interest rates keep falling people are going to realise that term deposits and the like will be giving very little, if any, return and they will once again look at growth assets like shares and property.

While I didn’t get the early present I was expecting, hopefully Santa will be kind to me in two weeks’ time!