26 Apr 2020

Caution advised for investors eyeing property market

3:51 pm on 26 April 2020

A property investor says property shortages are likely if the economy goes into recession because of the Covid-19 crisis.

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Home owners may be reluctant to sell during the current economic uncertainty. Photo: 123RF

Some economists are predicting a price drop of up to 15 percent over the next year, while turnover could fall by about a fifth.

Olly Newland said people simply will not sell unless they have to.

"People do not like taking losses, it will only be the most pressed people who will sell into this market.

"It's usually divorce or death or bank pressure that forces people to sell, and that's a very small part of the market."

Newland said it could be risky investing in an uncertain market.

"There may be more shocks to come, hopefully not. I'd be very cautious about investing, unless you've got a very large equity and can afford to lose."

Property like many investments always has the potential to be risky, he said.

New rules for real estate under alert level 3

Meanwhile, as the country moves into alert level 3 at 11.59pm tomorrow, all real estate work is still required to be done remotely wherever possible.

Buyers and sellers who deferred settlement during alert level 4 may now be able to settle as long as both parties agree. Buyers and sellers can also move house.

Those wanting to buy a property that has tenants will be affected by new government protections against terminations within the next few months.

Property inspectors, valuers, engineers and tradespeople can visit properties at alert level 3 if it is necessary, if they comply with public health and industry-specific guidance and if the property's occupants agree.

For pre-settlement inspections, virtual methods should be used to inspect a property. If this is not possible, with the seller's consent and the tenant's consent if the property is tenanted, the buyer can visit the property. Up to two people from the same extended bubble may visit, plus the real estate agent.

Open homes are not allowed at alert level 3. Where possible, buyers should view a property virtually, for example, by viewing a video of the property.

If required, private viewings can take place under alert level 3. Only buyers who are serious about making an offer are allowed to have a private viewing.

If a potential buyer or an occupant of the property are self-isolating or have been in contact with someone with Covid-19 within the past 14 days, then the private viewing cannot take place.

If either party is ill with respiratory symptoms, the property viewing can't take place.

Open home sign at a house for sale in East Auckland

Open homes are not allowed under alert level 3. Photo: RNZ / Claire Eastham-Farrelly

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