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 March 4, 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.


Here is an extract of Tony’s 5 March 2009 comments on “if I were a house buyer what would I do?” –

The range of choice available to a potential buyer is very wide. Vendors are relatively motivated. Financing costs are lower than any sane person thought possible a year or even a few months ago – and further slight downside beckons. An old rule of thumb says that for any asset market you should not try to pick the top or the bottom. Always be prepared to sell when buyers abound and sacrifice the last portion of price gains. And be prepared to buy while range of choice is superb, holding back from trying to extract the last 5% – 10% from the purchase price.The big bugbear here of course is the prospect of a decent hike in New Zealand’s unemployment rate.  Though lets be a bit more specific here. With population growth accelerating the unemployment rate is not going to be the most accurate labour market indicator to use when gauging pressures on the housing market. Over the past year while the unemployment rate has gone from 3.4% to 4.6% employment has continued to grow – by 1% or 21,000 people. We think employment numbers will decline, but percentage wise considerably less than the unemployment rate will rise. 

What this means is you need to watch for yourself getting overly pessimistic about the housing market based on unemployment numbers when it is employment which actually matters.

If I felt there was a good chance I would get laid off in the coming year and I could only just meet a 20% deposit at the moment I would not buy a house because of the chance I could not continue to meet mortgage repayments. If however I felt the chances were good for continued employment then I would be out seriously looking at the moment. My view remains that the best buying opportunities in general in the current market will occur before the middle of this year.


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