Interest rates drive investors into property: Alexander
More investors will choose to put their money into even quite expensive properties as interest rates remain low, says BNZ chief economist Tony Alexander.
Friday, September 21st 2012, 12:00AM
by The Landlord
“This investment surge will focus naturally first of all on lower-priced houses in Auckland, then more and more on relatively expensive ones in favoured suburbs, with people willing to gear themselves into places over $1 million in the expectation that one to three years down the track they will be able to flick it on for a tidy profit.”
He said investors would also become more active in other parts of the country.
But so far the Auckland housing market buzz hasn't spread to many other parts of New Zealand.
In Auckland, 54.2% of agents reported that buyers were more motivated. In Wellington that figure was only 10.5%.
In Auckland, the main reason holding buyers back was a lack of listings (63.7%) but in the rest of the country other factors such as not being confident of being able to sell their house (16.1%) and worries about finance (17.9%) were reported.
Auckland buyers were more likely to have been put off by a builder’s report than buyers in other parts of the country.
Alexander said in terms of interest rates, it was hard to predict what would happen. “Predictions of interest rates have changed more in the past four years than I have ever seen before.”
He said he would recommend fixing a loan for two years at 5.4% because it is a cheap rate and provides certainty, while leaving a portion floating to make lump sum payments.
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