Property Values are Dropping - But Don't Panic!
You might have seen media articles or reports about reductions in property values or a slowdown of the market, particularly in Auckland. But what does this mean – in practical terms – to the average property owner?
For many, the answer is not much (apart from having to accept a reduction in ‘net worth’). Property values are volatile. They can reasonably be expected to rise (as they had been) and fall (or flatten out) over time. Perhaps the most difficult aspects to predict are when and by how much.
If you intend to sell and buy at the same time, in the same market, you may be selling your property, for, say, 10% less than it might have fetched a year ago, and buying a replacement property for, say, 10% less than you might have been able to buy it for a year ago. The net result is not much different (although your property might take longer to sell in the current market, and you might be competing with fewer people for the replacement property).
Bridging finance is an area that purchasers need to be wary of in this market, and banks have certain criteria with regards to bridging finance. The benefits (of bridging finance) versus risks should be carefully considered.
If you intend to exit the market completely (sell but not buy) don’t be surprised if your sale price is less than you might have expected a year ago. If your mortgage finance is close to the property value it would be wise to ensure that you are in a position to sell the property and repay the Bank’s debt – before signing the agreement to sell.
Perhaps the best advice for those concerned about the property market is… Don’t Panic!
If you are looking to sell and buy, or even just sell, we can help you determine potential options, and (if you’re looking to buy) apply for a pre-approval (so that you can be sure you will have access to finance to buy another property before you sell).