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If I am considering selling, why should I go to market now?

By Alicia Hardy

Whilst the current selling conditions are strong, it remains extremely hard and uncertain to predict what may happen
in the property market over the next six months, 12 months and certainly the next few years.
There are many economists predicting that property prices may decline over the next year or so.
When you consider the two basic fundamentals that drive property prices – supply and demand – many
are suggesting that supply may outweigh the demand in the next six to 12 months and possibly longer,
creating conditions less favourable for sellers.

How have these opinions been derived? The key government stimulus package (the Wage Subsidy Scheme)
is currently scheduled to end this month, although qualifying businesses are able to apply for a further
eight-week extension through to the end of August 2020. Banks have offered a large number of homeowners
mortgage deferment support which is scheduled to end in September 2020. Many experts are saying that when
these support measures come to an end we will start to see larger volumes of new properties come onto the
market, causing a large supply of properties available for purchase.

What many 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 9.2% this year. Because of the above considerations, 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 May New Zealand Property Focus report ANZ economists confirmed their
previous forecasts and expect to see house prices to fall 10-15% over the coming year, compared with an 8-10%
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.

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. Selling now takes many of the above risks out of the
equation and enables you to sell with maximum certainty. The alternative to avoiding the potential risks ahead
is to
postpone selling your property for the next few years if you can.

* The information is general information only, not financial advice, and does not take into account your individual objectives, financial situation or needs.

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