St Heliers character – Buy, Sell, Or Wait?
People often base their decision on whether to buy, sell, or wait on popular opinion when objective thought offers more fruitful results. Future possible mortgage rates and future possible St. Heliers residential character prices indicates it’s better to act now instead of wait.
Future mortgage rates largely depend on the Official Cash Rate (OCR) and other domestic related effects. Simply put the OCR is the rate the save Bank of New Zealand (RBNZ) will lend to and borrow money from edges overnight. The RBNZ is the central bank of New Zealand and is responsible for New Zealand’s money and monetary policy.
The OCR helps control inflation. After receiving the money edges add their margin to the OCR before issuing mortgages. If the RBNZ want people to use more and save less it decreases the OCR. Mortgage rates then go down and more buyers go into the market.
Inflation expectations have fallen back lately with Statistics New Zealand reporting retail spending in January was flat though overall spending was up due to fuel price increases. Statistics New Zealand is the national statistical office of New Zealand and collates reports on all applicable statistical information (population, economics, industry etc) to the nation.
Economists agree mortgage rates will go up. Dr. Ganesh Nana (Senior Economist at BERL) points to 6.3% by April; Koon Gon (ANZ Senior Economist) indicates 7% by the end of the year; Tony Alexander (BNZ Chief Economist) mentions 8.5% by the end of 2011. Taking advantage of low mortgage rates currently on offer method lower repayments in the short to median term when buying a St Heliers residential character.
BERL provides economic impact assessments, profiles and forecasts to businesses, industries, councils, and other agencies. Both BNZ and ANZ are major Australian and New Zealand commercial edges.
New Zealand based mortgage interest rate sites indicate the median variable mortgage rate currently hovers around 6%. Assume variable mortgage rates increase by 0.35% every quarter from January 2010 for the next 2 years to reach 8.45% in December 2011- the approximate level suggested by Tony Alexander.
Variable rates also known as floating rates go up and down according to wider market influences. An interest only mortgage exists where only the interest on the complete amount borrowed is paid. The principal is paid in the future at a pre-agreed date. The principal is the amount of money borrowed to buy the character.
Based on the above assumption the total interest only mortgage paid on $630,000 ($700,000 character with a $70,000 place) by December 2011 would be $91,534 which is $15,934 more than if mortgage rates stayed at 6%.
Waiting for mortgage rates to come back to 6% would save $15934. however it’s thoroughly possible St Heliers residential character prices will increase by more than $16,000 by December 2011.
Using REINZ statistics, St Heliers residential character sale prices trended upwards from approximately $675,000 (February 2009) to $800,000 (January 2010). The Real Estate Institute of New Zealand (REINZ) collects sales statistics from real estate agencies around New Zealand and has a history of the most up-to-date sales statistics.
A trend line is a straight line that’s placed as near to as many sales prices on a graph as possible. Trend lines based on the moving median have more accuracy because the median is not affected by very high or very low prices.
A moving median is the typical price that a St Heliers residential character sells for in each individual month. The median is the price that sits in the middle of the data after ordering each months sale prices from highest to lowest. The moving median moves up and down from month to month depending upon the number and value of sales.
It would be ambitious to extrapolate the trend line to June 2010 and claim $840,000 will be St Heliers character future median value. however it does show St Heliers residential character has good future price possible.
So when you decide whether to buy, sell, or wait, ask yourself whether St Heliers character prices will go up or not. Therein lies your answer.