Uncertain times prevail

In the wake of the lending restrictions imposed by the Reserve Bank in late July we saw an immediate drop in buyer demand. The lending restrictions will have made purchasing impossible for some, for many others the uncertainty of what direction the market may now take will be a factor.

However, on the other side of the equation, the number of new listings that came on to the market throughout August and September was far fewer than expected.

Then in October and November, rather unexpectedly, there was a huge surge in new listings. One possible explanation could be that people needed a couple of months to work out whether they could still secure funding for their next purchase.

Meanwhile, there has been a definite drop in sales activity. Looking at our buyer classification, this drop in activity has impacted movers most with their share of sales dropping. JONNO INGERSON, DIRECTOR OF RESEARCH, CORELOGIC

People looking to move house are typically the most sensitive to uncertainty, and their purchases are often more discretionary. They may also be considering the sensibility of increasing debt levels as we head away from record low interest rates.

Rather unexpectedly, investors and firsthome buyers are generally holding their share of sales.

What then, does the future hold? Clearly one of the biggest considerations for all property owners at the moment is the impact of the recent earthquakes.

Although the impact on residential property was largely confined to areas very close to the earthquakes’ epicentres, there has been a subsequent freeze in new insurance for a large block of central New Zealand.

People buying houses cannot bring their own insurance, instead having to settle with taking over any existing insurance on the property. This freeze will remain in place until large aftershocks subside, and during this time it will likely slow sales activity.

Another source of uncertainty is what impact Donald Trump’s election will have on us, if any. That will take time to play out, much like the Brexit result earlier in the year.

So then, LVR restrictions, earthquakes, bottomed- out interest rates, Trump and Brexit all offer up increased uncertainty, and this is leading to an early slow- down for Christmas, a week or two earlier than usual.

It is likely that many people will use the holiday period to see how the dust settles and decide on their next move in the New Year.