North Harbour Commercial Property Group, sponsored by Pathfinder Solutions
Wednesday 14 September 2022, 5.30 pm-7.30 pm
Tony Alexander’s father was a golfer and his grandfather was a greens keeper, so he thanked Business North Harbour for inviting him back to North Shore Golf Club.
Tony has an encyclopaedic knowledge of and seemingly instant recall for economic facts and figures. And yet his gift is to convey all this data in relatable terms, always speaking in plain English and avoiding industry jargon. He did, however, repeat two acronyms throughout the evening: FOMO (fear of missing out) and FOOP (fear of over-paying).
Here are just some of the points raised during his dynamic 60-minute presentation:
The cyclical downturn in house prices since December is probably overdue and an opportunity for serious first-home buyers (and other purchasers) to get in before the FOOPs. First-home buyers are stepping up; they realise that they’re purchasing an investment that fulfils a purpose, rather than simply, for example, buying crypto. “Do not wait for the last 5 per cent in order to buy low,” he urged, presenting this scenario: Have anyone’s parents ever talked about purchasing their property in 1982 for $78,000 and how they wish they’d waited a few months and bought it for $77,600. “No! No-one ever says that!”
Other buyers are still here too. Having been waiting on the station platform in the shadows for some time, investors are starting to “peer into the sunlight”.
There have been significant ups and downs since 2020’s seven-week lockdown. However, the perception that this would be “bad for everything” didn’t come to fruition. One of Tony’s surveys, with 3,500 responses, found spending on shares, investment properties and a place to live. He subsequently asked real estate agents if they were sensing FOMO, and with house prices increasing by more than 2 per cent every month, a significant proportion of his respondents confirmed that yes, FOMO was real. This FOMO did slow after the 23 March tax and bright-line test changes, and when the price increases continued but at a lower rate.
FOMO returned in late 2021 when some house prices increased by 11 per cent. Tony believes that the bulk of current falls are a correction of this. So, today, FOMO has been replaced again by FOOP.
There are signs now that vendors have reached a “point of capitulation” and are willing to think, “I will meet the market”, allowing purchasers to negotiate and add their own conditions.
What else lies ahead? In an election year, if the polls favour National, the Labour government could “open up the spigots” and loosen spending.
Although the NZ housing market is in the “end game” of its price drop and listing shortages, he cautioned that things haven’t bottomed out yet. “There is more weakness to come” – but then the housing market moves in cycles.
Tony wound up his presentation on a positive note. He does not believe NZ is headed into a recession. There are generally 15 signs that this is occurring, but five key things are different compared to 2008.
- The Kiwi dollar is not over-valued, sitting at 0.60USD and not 0.68USD.
- NZ is a food-exporting country, and there are food shortages overseas. Moreover, prices are 20 per cent higher than 2019 levels.
- There’s been no inbound tourism for three years, and that’s now changed.
- Likewise, international students are returning.
- There is job security. Unemployment is sitting at about 3.3 per cent and could go higher, but there isn’t the fear of losing a job and not being able to find another one.
There followed a lively Q+A discussing such issues as townhouses, employee job-hopping, business efficiency, and NZ’s view of migrant workers compared to Australia’s.
Attendees showed their appreciation for Tony’s expertise and insights and, despite the time, many lingered to network and continue the conversations.
