Steve Koerber's Old Blog

Remuera's house sold name since 1998 – 021864166

If I Were A House Buyer What Would I Do?

Posted by Steve Koerber on January 22, 2009

071119_tonyalexanderThe Bank of New Zealand’s chief economist Tony Alexander is a respected commentator regarding all aspects of New Zealand’s economy.  If you would like to subscribe to his informative weekly economic commentary click here.

This week (Jan 20th 2009) Tony shared his view about the property market by putting himself in the shoes of a house-buyer:

I might have had a look at buying a property 12 or 24 months ago but found that the numbers simply did not stack up because the debt servicing cost was too high.  But I would run the numbers again assuming a 5.5% five-year fixed interest rate and see what affordability of my preferred property would look like.  The chances are that a very large number of people are going to find property extremely affordable this year and this is likely to add to demand and therefore limit the downside for prices.

The 5 year fixed 5.5% interest rate Tony talks about is a rate he predicts will occur before the end of 2009.

My personal opinion is that that rate should be” jumped on” when it occurs because I quietly suspect that 10% plus interest rates might be the norm from 2011 onwards.  The great thing about a blog is that you and I will be able to re-visit this post to see if I was right or wrong!

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