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Rent-a-quotes from David Chaston and Rodney Dickens.
Has anyone actually seen some evidence that this is happening? The story seems to be a lot of "people say" and "some think" kind of lets-create-a-bogus-trend journalism...
Renting out rather than panic selling
Has anyone actually seen some evidence that this is happening? The story seems to be a lot of "people say" and "some think" kind of lets-create-a-bogus-trend journalism...
Renting out rather than panic selling
IMOGEN NEALE - Sunday Star Times Last updated 05:00 26/12/2010
Homeowners are increasingly opting to buy a new house and rent out their old one, rather than try to sell it in a sluggish market.
Predictions from housing commentators are that by the end of the year there will be 25% more houses up for rent compared to the same time last year – a figure that will keep creeping up, says David Chaston, publisher of housing monitoring site interest.co.nz.
Real Estate Institute of New Zealand spokesman Bryan Thomson says a new realism over asking prices for homes is settling in and he is talking up a bump in sales activity since May.
In October there were 3903 sales, which rose to 5138 in November, though this compares to 6056 sales in November last year.
Chaston says even with the bump, sellers are increasingly refusing to be panic-sell, choosing to hold out for prices that suit them by opting to rent out the homes they are leaving. He predicts sales volume over the next four months will be around 10% lower than the past three years.
"In 2010 house sale volumes were down 20% on the previous year from May to November and I don't see any bounce back.
"My expectation is volumes will be another 10% lower and many more houses will go for rent."
His views receive some backing from businesses on the periphery of the housing market. Dan O'Connor, sales manager of The Look, a company that "dresses" properties about to go on the market, says he has "a great amount of forward work booked in" from people who have not sold in the early part of summer and are planning to try their luck again later.
Independent economist and former head of research at ASB Bank Rodney Dickens says house sales are likely to remain in the doldrums, partly driven by the continuing migration of Kiwis to Australia – which Chaston identifies as a major trigger for the decision to people to retain second homes and rent them out.
"Out there, there is some view that somehow the housing market can go off and do its own thing – like animal spirits or some magical wand. It's not magic, it's really basic economics," Dickens said, adding that the two major drivers were interest rates and migration.
"You don't get a significant housing recovery without those," he said. "I can't see much scope for interest rate cuts.
"If we hadn't had the [Canterbury] earthquake, the Reserve Bank should be cutting rates now – in line with the fact GDP fell this quarter and was weak last quarter.
"On the migration story, the most important thing there is the number of people leaving to go to Australia, and with the Aussie economy still looking pretty robust – it's not booming but it's much stronger than us – we're still likely to see above-average number of people leave and therefore our population growth remains below average."
In the year to November there was a net loss of 20,100 Kiwis to Australia.
"So where does the [housing] recovery come from?" Dickens asked.
Homeowners are increasingly opting to buy a new house and rent out their old one, rather than try to sell it in a sluggish market.
Predictions from housing commentators are that by the end of the year there will be 25% more houses up for rent compared to the same time last year – a figure that will keep creeping up, says David Chaston, publisher of housing monitoring site interest.co.nz.
Real Estate Institute of New Zealand spokesman Bryan Thomson says a new realism over asking prices for homes is settling in and he is talking up a bump in sales activity since May.
In October there were 3903 sales, which rose to 5138 in November, though this compares to 6056 sales in November last year.
Chaston says even with the bump, sellers are increasingly refusing to be panic-sell, choosing to hold out for prices that suit them by opting to rent out the homes they are leaving. He predicts sales volume over the next four months will be around 10% lower than the past three years.
"In 2010 house sale volumes were down 20% on the previous year from May to November and I don't see any bounce back.
"My expectation is volumes will be another 10% lower and many more houses will go for rent."
His views receive some backing from businesses on the periphery of the housing market. Dan O'Connor, sales manager of The Look, a company that "dresses" properties about to go on the market, says he has "a great amount of forward work booked in" from people who have not sold in the early part of summer and are planning to try their luck again later.
Independent economist and former head of research at ASB Bank Rodney Dickens says house sales are likely to remain in the doldrums, partly driven by the continuing migration of Kiwis to Australia – which Chaston identifies as a major trigger for the decision to people to retain second homes and rent them out.
"Out there, there is some view that somehow the housing market can go off and do its own thing – like animal spirits or some magical wand. It's not magic, it's really basic economics," Dickens said, adding that the two major drivers were interest rates and migration.
"You don't get a significant housing recovery without those," he said. "I can't see much scope for interest rate cuts.
"If we hadn't had the [Canterbury] earthquake, the Reserve Bank should be cutting rates now – in line with the fact GDP fell this quarter and was weak last quarter.
"On the migration story, the most important thing there is the number of people leaving to go to Australia, and with the Aussie economy still looking pretty robust – it's not booming but it's much stronger than us – we're still likely to see above-average number of people leave and therefore our population growth remains below average."
In the year to November there was a net loss of 20,100 Kiwis to Australia.
"So where does the [housing] recovery come from?" Dickens asked.
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