KEY POINTS:
Ashley Church, a veteran property investor with 30 years' experience, tells Herald on Sunday business editor Andrea Milner why now is a good time to buy:
1: Buyers have a choice of stock and not much competition at present.
2: Building consent numbers have fallen by
22 per cent and are still falling. Tony Alexander, chief economist of the BNZ says they are at their lowest level since the early-1990s and a homes shortage will start to show later next year.
3: New homes will be more expensive to build as the falling dollar increases the cost of importing construction material and a number of builders have left or are leaving the industry.
4: Investors have been quitting rental properties, which will lead to a shortage and rents rising. "Investors have largely disappeared from the market. Fundamentals driving the need for rentals have slowed but not stopped - rental demand is still strong; it's a recipe for a future boom," Church says.
5: Falling interest rates and tax cuts have increased the affordability of home ownership. Real Estate Institute president Mike Elford says home affordability is the best it has been for a long time. Buyers with good credit history and payment capacity are still able to secure low-deposit finance.
6: The real estate market has not imploded in the current financial crisis - prices have held steady in the face of negative media. Elford says despite slowing sales, median prices are holding.
The national median house price for last month was $337,500 compared with $335,000 in October and $352,000 for the corresponding period last year. This shows a decrease in national median house values of 4.11 per cent compared with this point last year. Alexander says house prices will decrease only 5-10 per cent by the end of the year.
They will stay flat over next year but rise in 2010. "It is quite amazing the number of people who seem to believe we should be predicting massive price declines in the face of fundamentals which suggest otherwise," says Alexander, who receives "hate mail" for refuting suggestions that house prices will fall by between another 30-40 per cent.
Church says the present property slump is nothing like that in the mid-70s when values fell 38 per cent. We won't see that this time, he says, because the drop in interest rates will allow people to hold on to their homes.
7: At the same time, vendors are now very negotiable on price compared with this time a year ago. They are increasingly aware they may need to leave some money in their property in the form of vendor finance if they want to sell, and that investor buyers look for positive cash-flow properties.
8: Positively-geared property deals can again be found all over.
9: Prices will recover and property values will increase again. The downturn in property is due to a lack of confidence rather than any change in the property market fundamentals, Church says.
10: There is nowhere better for most Kiwis to invest their money given that property has doubled in value, on average, every seven years for more than 50 years - and there is nothing to suggest that will change.
* Ashley Church is the chief executive of the Property Traders Association.
