COMMENT: During the 25 years that I lived in Auckland before moving to Hawke’s Bay, there were a few things that regularly provided comfort to me and which were so familiar as to define the city.
These included some of the obvious icons – the Sky Tower, the harbour bridge, and the majesty of Rangitoto - but there were also some less obvious, but equally reassuring things, which will always be “Auckland” in my memory. These include the picture frame at Shakespear Regional Park, the stunning vista from almost any vantage point along Tamaki Drive, and the Magness Benrow radio commercials.
For those of you outside Auckland, Magness Benrow is an iconic Auckland appliance store, which, for years, has run a series of quirky radio ads featuring the owner and one of his team (or, at least, they did when I was there).
The ad changed every week and always featured some entertaining story or situation as a backdrop to whatever the “deal of the week” was. It was invariably funny and engaging – and the point, of course, was to continue to find new ways to repackage a consistent and familiar message of innovation, concern for the little guy and price competitiveness.
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In this respect, the Magness Benrow ads have much in common with the role of the more responsible property commentators amongst us. In the face of an avalanche of prophecies of doom and gloom from various sources, each trying to outdo the other in the severity of their predictions, there are a few of us who have been around for a long time and who, having seen several cycles come and go, aren’t panicked about the prospects for the market in the medium term.
For us, as with Magness Benrow, it’s mostly about repeating the same message in different ways – but always reinforcing the same basic points. Sadly, it’s a difficult message to “reinvent” because there are only so many ways to tell people that the market is predictable; that it isn’t going to crash; that we’ve been here before; that this difficult period will pass; and that we’ll eventually be complaining about rising house prices again.
But it also happens to be true. We know what caused the downturn (high inflation, which required extreme Reserve Bank intervention, and draconian changes to lending laws, which made it almost impossible to borrow money for a while) – and we know that one of these (the lending obstacle) has been partially resolved and that lending is growing again.
Ashley Church: “I know that some people are doing it tough and worried about the impact of those interest rates and their ability to pay the mortgage.” Photo / Ted Baghurst
We also know that the Reserve Bank will eventually get the inflation bogeyman back under control – we just don’t know when – and it’s this that’s at the heart of our continuing nervousness. Once the Reserve Bank is confident that it has tamed inflation, we’ll see interest rates begin to stabilise and, depending on the economic outlook, even starting to edge down again. Once this happens, we will quickly start to see positive activity in the market again.
Meantime, however, while most of the country has seen little real impact from the “correction” and most properties are still worth substantially more than they were two years ago, I know that some people are doing it tough and worried about the impact of those interest rates and their ability to pay the mortgage. For you, the smart approach is to take charge of the things that you can control. These include fixing your mortgage for a period that will give you certainty without paying higher rates for longer than you need to. The best advice on this seems to be to fix for either a year or 18 months. Other strategies include taking a hard look at your weekly budget to see whether there are things that you can do without for now, talking to your bank to see if there are options for relieving some of the pressure, and considering ways to increase your household income over this time.
I’m not suggesting that any of these things are easy to do, and I certainly don’t want to trivialise the reality of the stress that you may be under but the medium to long-term outlook for your property is what it has always been – it will almost certainly be worth substantially more than it is right now.
- Ashley Church is a property commentator for OneRoof.co.nz and a real estate business owner. Email him at [email protected]
