‘Real-estate prices must increase’

Press, 30 July 1986, Page 38

‘Real-estate prices must increase’

There has never been a better time to buy real estate, according to the Christchurch director of Harcourts Real Estate, Mr Stephen Collins. -

The wild fluctuations in interest rates in the past two years have led to an artificial dampening ,of real estate prices, And although lending .rates have begun to drop, many people are waiting to see what will happen before making a commitment to buy, Mr Collins says.

However, overseas trends show that the cost of waiting for a further drop of a few percentage points is likely to be more than offset by a rapid rise in house prices once the market begins to move.

"As GST takes effect on new building costs, it will increase the gap between new and existing home

prices. This is a trend that has always preceded a rapid increase in house prices,” Mr Collins says. “By the end of next year, I predict that the average price of a house in Christchurch will be more than $100,000,” he says. (At present the average price is about $70,000). If past trends are anything to go by, Mr Collins says, the ideal time to purchase is .at the beginning of the price spiral, while there is an abundance of mortgage finance available.

As the market begins to move and good properties become more difficult to find, more mortgage finance will be taken up and the laws of supply and demand will start to increase house prices. Real-estate industry

figures show that .there has not yet been any significant increase in the number of houses sold since interest rates started to fall. It is probably only a matter of weeks, however, until the real increases begin to be felt, he says.

“Right now, it is probably easier to buy a home than at any other time in my experience. Competition between lending institutions means that many of the barriers that in the past have faced prospective home buyers have now been removed,” Mr Collins says. “At the moment provided that income criteria can be satisfied, anyone is capable of borrowing mortgage finance — savings records and the like have been waived,” he says.