I have been having a long hard think about the current state of the NZ housing market. My conclusion is that its going to go 'ping' shortly and some people are going to get burnt. Why do I think this?
- There is a whole generation of first home buyers, loaded with student debt and credit cards from OE's etc, who are now increasingly becoming priced out of being able to enter the market.
- The Baby Boomers are soon hitting retirement age, at which point some are going to want to release some equity for lifestyle reasons.
- This country has a major deferred maintenance problem with its overall housing stock, compounded in Auckland by leaky buildings issues
- Interest rates are on the up
All in all I see this leading to the rapid onset of a 'buyers market' where prices simply will have to drop. For these reasons, among others, I would advise anyone to think twice about what sort of property they buy in the next year or two. Particularly if it is an entry level or 'investment/ rental' option. There is a correction in the marketplace coming, its a matter of when and how much. And its just around the corner.
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