Property Investment
3 min read
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ANZ reckons we’re almost at the bottom of the market (earlier than expected).
And they’re not the only ones.
The property market has fallen about 16% from the November ‘21 peak.
Earlier in the year, most forecasts said the property market could bottom out between July 23 – June 24.
Today, the same commentators say it’s more likely to be June this year (or thereabouts).
According to its latest summary, ANZ says that house price declines won’t be as big as previously expected.
Instead of a 22% decline from the market's peak, they now forecast that house prices will fall 18% in total.
“With prices already down around 16%, that means there is only around another 2% to go, with our forecasts assuming prices bottom out in June.”
ANAZ list 3 main factors that are contributing to a “stronger than expected” housing market:
BNZ says the bottom of the market is coming but is not as optimistic as ANZ. They stand by their forecast that property prices will still fall another 4-5% (20% total decline).
In their most recent newsletter, they said –
“Our broader view is one where the correction is nearing its end, and we may see signs of stabilisation emerge over coming months.” – BNZ, Property Pulse March 2023
So a few months off, but we’re not that far away.
They’re picking the bottom of the market will come “mid-year”. And are waiting to see how higher interest rates and recent weather events work their way through the system.
Tony Alexander joined Ed and me on the Property Academy Podcast earlier this week.
His three episodes start coming out on Monday, but I want to let you in on his house price predictions.
His best guess for the bottom of the market is “winter”. That’s somewhere between next month (June) and August.
He agrees, "No, we’re not there [at the bottom] yet”. Because:
But we’re not far off.
Buying at the bottom of the market is all well and good. But what’s the opportunity?
Are house prices really going to increase that quickly after they bottom out?
According to Tony (in the yet-to-be-released podcast) … they’ll likely take about 3 years to get back to where they were in November 2021 (the peak of the market).
That 3 years is the same time the Treasury has suggested in their most recent forecast.
If that is correct, house prices will increase by about 22% over the next few years.
What would that mean for a potential investment property?
Let’s say you could time the market perfectly and purchase a $600,000 property.
In 3 years, it could be worth $731,707.
Almost a $132,000 gain.
Is that definitely going to happen? No. Forecasts are just forecasts.
There’s no guarantee that it’ll happen exactly like that. But –
And as ANZ poetically puts it, the “animal spirits” of the housing market can get very wild.
Are we at the bottom? No.
But it’s near. And for some investors, there is an opportunity to be had.
Managing Director, 20+ Years' Experience Investing In Property, Author & Host
Andrew Nicol, Managing Director at Opes Partners, is a seasoned financial adviser and property investment expert with 20+ years of experience. With 40 investment properties, he hosts the Property Academy Podcast, co-authored 'Wealth Plan' with Ed Mcknight, and has helped 1,894 Kiwis achieve financial security through property investment.
