Ray White Now New Zealand 29.6.2020 Version 6 - 29 June 2020 - Page 12

If I am considering selling, what are the reasons why I should go to the market now? This is not a normal year, nor a normal property market cycle. While many people may want to sell in what they perceive as a traditional selling season for example spring, we would urge you to consider listing your property now as it may be the best opportunity you’ll have all year given the current market fundamentals. Whilst the current selling conditions are strong, it remains extremely hard and uncertain to predict what may happen in the real estate market over the next six months, 12 months and certainly the next few years. The key reason to list now is to remove as much risk as possible as to what might happen later in the year. There are many economists predicting property prices will decline over the next year or so. There are two basic fundamentals that drive property prices, supply and demand. Many suggest that supply will outweigh the demand in the next six to 12 months and possibly longer, creating conditions less favourable for sellers. The factor that is causing most concern is that between now and September, an unprecedented amount of public and private sector stimulus is due to come to an end. Regarding buyers, the withdrawing of government stimulus and the potential for a steep rise in unemployment may result in less buyers having the ability to purchase properties. Economists are saying that the next 12 months may hold: • Wage subsidy support finishes; • Mortgage deferment support ends; • Significant rise in unemployment; and • Therefore the number of properties for sale will increase and there will be less buyers looking to purchase property. Regarding buyers, the withdrawing of government stimulus and the potential for a steep rise in unemployment may result in fewer buyers having an ability to purchase properties. The New Zealand Treasury is forecasting unemployment to peak at 9.8% this year. The news is full of comments by economists speculating that property owners will not achieve a better result by waiting to sell in six to 12 months, or even longer. In its June New Zealand Property Focus Report, ANZ economists confirmed their previous forecasts and expect to see house prices to fall 12% over the coming year, compared with a 6% fall in GDP. There are some economists that are not as concerned by these potential risks to the economy. They point out that significant low-interest rates will provide a sustainable buffer to home affordability, and that the rise in unemployment is in sectors that will not materially impact buyer activity. However, even these economists acknowledge there could be downward pressure on prices over the medium term. Let’s have a closer look at why these opinions have been derived by key economists. Firstly the initial 12-week government stimulus package (the Wage Subsidy Scheme) It is for these reasons that many are saying if you are thinking about selling over the next year or two, now could be the time to achieve the best result. has now finished, although qualifying businesses have Selling now takes many of the above risks out of the until 1 September to apply for a further eight-week equation and enables you to sell with maximum certainty. extension. Banks have offered a large number of The alternative to avoiding the potential risks ahead homeowners mortgage deferment support which is is to postpone selling your property for the next few scheduled to end in late September 2020. Many experts years if you are comfortable to do so. If you need to sell are saying that when these support measures come to an sometime over the next, say, 12 months, because of any end we will start to see larger volumes of new properties financial concerns, or you need to upgrade, or downsize coming onto the market, causing a large supply of your property, the current market is active so now may be properties available your best opportunity. 12 The information is general information only, not financial advice, and does not take into account your individual objectives, financial situation or needs.