Is Now a Good Time to Buy Property in New Zealand?

Why, if ASB Bank says investor confidence is riding high, are fewer buyers committing to property in New Zealand?

General investment data as well as specific housing market statistics released by ASB Bank in New Zealand last week revealed a number of positive trends in terms of property buyer and investor sentiment relating specifically to the domestic residential real estate market in New Zealand, with well over half of all those surveyed by the bank confident that house prices are on the rise.

In fact most people surveyed believed that the values of all classes of investment would rise in 2007 and that the property market is once again sufficiently buoyant to be offering strong investment opportunities - so the question on everyone’s lips is - is now a good time to buy property in New Zealand?

From reviewing ASB Bank’s data the answer is seemingly yes – there is more confidence among investors than at any time since the Investor Confidence Survey began in 1999, 36% of all those surveyed believe their investment returns will be higher this year than last, of all the asset classes considered from stocks and shares to property and managed funds for example, residential real estate in New Zealand was the number one ranked asset class for confidence among investors.

If you take all of this positive data in a stand alone sense, then the answer to the question posed at the start of this article – namely ‘is now a good time to buy property in New Zealand?’ – has to be yes…

…But actually it’s not such a simple question to answer because overshadowing the positive findings from ASB Bank in the general real estate media circle was the news that property stocks in Spain crashed last week. 

You may be wondering how Spain and New Zealand’s property markets could be connected – well, the news from Spain gave rise to many commentators stating that the global property market crash that has been predicted for so long has had its wheels set in motion.

If this is true then the answer to our purchase timing question with specific relation to property in New Zealand may actually be no!

Are you feeling confused?  Well, you’re not the only ones.  Even in spite of everything respondents to ASB Bank’s survey said, fewer buyers are actually being tempted into committing to New Zealand’s property market right at the moment!  Among experts in the industry this has been largely attributed to affordability.  Taking a global property boom out of the equation for just a minute, the chief economist at ASB Bank believes that the residential property market in New Zealand will only be enjoying its current period of robust buoyancy for the short term.  This is because interest rate rises are putting the breaks on what the buying market can actually afford.

Expert opinion relating to New Zealand’s housing market feels that as affordability is being increasingly stretched, house prices will have to stop rising and stagnate or negatively adjust to correct the over extension of affordability that is currently the norm in New Zealand.

This very fact is also being cited in other property markets around the globe from Spain to Cyprus, from Ireland to the UK and from Australia to New Zealand.  So – our answer to the question posed is that now is a good time to buy property in New Zealand if you’re seeking a home to buy and live in immediately and for the long term – but if you can wait a while or if you’re an investor you’d be better off putting your decision on hold and waiting until a period of stagnation or even a crash occurs because then you will get far more for your money!