Wednesday 23rd of April 2008

The latest stats from REINZ and QV in the past week have shown that the property market is still falling. The questions many people are asking are how far will it fall and when will it reach the bottom?

From a property investor's perspective the question is possibly slightly different: Should I sell, hold or is it an opportunity to acquire more assets?

Looking through the papers and talking to various real estate agents, it seems there are quite a few investors cashing up at the moment.

I would have thought it was about six months too late to be doing that.

With such a big gap between purchasers and vendors' price expectations, selling only makes sense if there are pressing issues like cash flow (arguably, many refinancing home loans will be experiencing that with rates in or near double digits).

One conversation I had the other day with a long-term property investor has a tip many can use. This person, Val and her husband Peter, are being profiled in the next issue if the NZ Property Investor.

Their story has many interesting angles, but one part of it is that they provided seed money to help all three of their children get into the property market some years ago.

One of her daughters decided a number of years ago to sell a property as the market turned, thinking that it was time to sell up and put the money in the bank for a while.

At that time, just like now, bank rates looked pretty attractive.

However, when the daughter went to re-enter the market again she found it extremely difficult to do.

The reason? When markets hit the bottom, their initial recovery, or bounce can be quite strong. A couple of messages here are; stay in the market if you can, and don't try to pick the dead bottom of the market. No-one can do that and if you get it wrong and are too late, then you will miss an opportunity.