2. Following the trends

By VICKI HOLDER, editor Weekend Herald Real Estate

Greater choice is bringing new elements to the traditional real estate scene. Erich Oettli, Auckland president of the Real Estate Institute, says the second-hand market has suffered as a result of all the sweeteners, such as cheap whiteware deals, being offered to get people into new housing.

Graham Crews, senior lecturer in real estate at Massey University, says Aucklanders are following a trend common in the western world, particularly in the US and Australia, where people are moving north and west towards the sun and beaches, for lifestyle reasons. But although some Aucklanders are heading to places like the Bay Of Plenty and Hawkes Bay for a better quality of life, many people from outside the city are moving to Auckland for jobs.

Carey Smith, chief executive of Ray White, says investment products are more flexibly than they have ever been. "Investors are looking for more liquidity rather than longer-term investment, which property represents."

There are those who are earning reasonable money, accumulating cash and no longer limiting themselves to the New Zealand investment market.

Three to four years ago the average punter, says Graham Crews, would have bought a second house. Now they are looking at investing on the international scene. But investing offshore means people are exposing themselves to the risk of foreign stock-market and exchange movements. While that risk has worked out favourably for many people lately, it's prudent strategy to balance risk when moving money offshore. Fund managers will be encouraging people to keep some in New Zealand.


This seems to be the reason for the increased demand for the more expensive properties. Mark Thompson, director of Barfoot & Thompson says: "The uncertain economy has helped us, as people see houses as safer - and they also get a roof over their head."

Sue Stanaway, Bayleys residential manager, points out that over the last decade real house prices grew two to 2.5 per cent per year after inflation. But most people aren't investors. They don't analyse how much they will gain financially from buying a house. "In general, home buyers are looking for a product that suits their needs, in a good location, that's right for them.

"People also have to remember that while they are buying a new home, they are not paying rent. It's compulsory saving and equity building. They have to include that in their thought pattern."

Rural boom comes to town

One of the up-sides to the low dollar is the revitalising effect excellent export earnings are having on the rural economy. Kerry Coleman, head of Bayleys research, believes it will have a flow-on effect in the next year as farmers start spending their money in urban areas. "It will take time to cycle through, but there's an underlying soundness to the market."

David Clifton, who travels throughout New Zealand in his role as northern auction manager for Harcourts, already sees positive signs, especially in rural areas.
Clifton reports the low New Zealand dollar has stimulated phenomenal interest in properties from overseas purchasers. Some real estate offices have reported site-unseen sales through the internet. Although a lot of people would like to see the dollar stronger, New Zealand has become a mecca for overseas people with currencies stronger than ours.

Bayley's Hawkes Bay salesperson Christine Thomas says many of the inquiries she gets through the internet are from ex-patriots seeking to return home flush with US dollars or pounds sterling. "They are searching for a place in the sun, attracted back by the climate, countryside and lifestyle," she says.

As a former Australian, Clifton believes New Zealanders grossly undervalue their real estate, especially waterfront and coastal properties. "It's a wonderful time for us to promote our real estate," he says.

He notes that, while we've had our boom and our bust, house values have now stabilised, which gives people something to plan on. "It's not likely to change dramatically. With greater stability, people can make some rational decisions."

A good time to buy

Clifton says as far as investment goes, there's a real estate theory that you should stand up when everyone else sits down. He believes now is the time for people to stand up and buy if they want to see good returns on their investment.

Mary Holm, Herald columnist and investment author, agrees: "The market has been slow for a long time. I would think it's a good time to buy, especially if it's a first home. People have become adjusted to prices and having to sell low. If you are a new home buyer, you will probably do very well."

In the boom market, real estate companies grew and many people got into real estate. Clifton says the difficult times culled many less proficient players from the industry.

He also points out that because people are sitting, waiting, real estate agents are low on housing stock at the moment which augurs well for sellers. "Demand is exceeding supply. There hasn't yet been a lift commensurate with the push and pull. But it's inevitable there ought to be a lift in values."

* Part 3: How to get the best possible price for your property

* We welcome your comments and ideas. Please send them to Real Estate Summer Feature, The New Zealand Herald, PO Box 32, Auckland.