http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11207102
This article expresses predictions by American economist and demographer Harry Dent for the New Zealand Property market. Harry has predicted market crashes previously, including the decade long economic decline in Japan and the 2008 global financial crisis. Harvey predicts New Zealand property prices to fall between 30% and 50% in the next few years. Due an “un-believable bubble” of high property values proper up by predominantly Chinese buyers, however the Chinese market is also in an “unbelievable bubble”, created by strong demand with little supply. If China’s market was to collapse it would initiate a market crash in New Zealand also. Harry Dent states that a collapse that could start as early as this year could create a depression rather than a recession, and the “unwinding of commodity prices” would be devastating to New Zealand’s export-led economy (Backhouse, 2014).
This article is directly relevant to the company of Welly Real Estate as the company is involved with the property market on a commercial scale and the article is relevant to the property market on a national scale. If the property market in New Zealand was to collapse the article states is predicted then Welly Real Estate will be affected directly. Dent states that a depression could ensue from the results of such a crash from China’s market, this would be devastating to the company as property de-values exponentially during economic collapse. Example, “A house purchased prior to the Great Depression in 1920 would have lost 51% of its value (in inflation-adjusted terms) by the end of 1939” (UC Davis, 2010).
The New Zealand market is reliant on the Chinese economy (Adams, 2014). Therefore if an economic collapse in China occurs then New Zealand’s economy will be affected to a large extent. China can effectively be used as an indication of what is to happen in the New Zealand market, if China collapses then New Zealand is sure to follow. Company investments should be made with this in mind, property prices should be significantly lower in the next few years if Dent’s prediction is correct. Property sales should occur while the nation is in a “bubble” and purchase if possible delayed until possible collapse where they will be cheaper.
Works Cited
Adams, C. (2014, March 21). New Zealand Herald. Retrieved March 26, 2014, from http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11223316
Backhouse, M. (2014, February 21). New Zealand Herald. Retrieved March 12, 2014, from http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11207102
UC Davis. (2010, January 10). UC Davis School of Managment. Retrieved 03 26, 2014, from http://gsm.ucdavis.edu/research/real-estate-bubble-crystal-ball-great-depression-and-manhattan-home-prices
How is this going to affect the commercial real estate market? We specialise in office design and leasing of commercial space.
ReplyDeleteThis article expresses predictions by American economist and demographer Harry Dent for the New Zealand Property market. Harry has predicted market crashes previously, including the decade long economic decline in Japan and the 2008 global financial crisis. Harvey predicts New Zealand property prices to fall between 30% and 50% in the next few years. Due an “un-believable bubble” of high property values proper up by predominantly Chinese buyers, however the Chinese market is also in an “unbelievable bubble”, created by strong demand with little supply. If China’s market was to collapse it would initiate a market crash in New Zealand also. Harry Dent states that a collapse that could start as early as this year could create a depression rather than a recession, and the “unwinding of commodity prices” would be devastating to New Zealand’s export-led economy (Backhouse, 2014).
ReplyDeleteThis article is directly relevant to the company of Welly Real Estate as the company is involved with the property market on a commercial scale and the article is relevant to the property market on a national scale. If the property market in New Zealand was to collapse the article states is predicted then Welly Real Estate will be affected directly. Dent states that a depression could ensue from the results of such a crash from China’s market, this would be devastating to the company as property de-values exponentially during economic collapse. Example, “A house purchased prior to the Great Depression in 1920 would have lost 51% of its value (in inflation-adjusted terms) by the end of 1939” (UC Davis, 2010).
The New Zealand market is reliant on the Chinese economy (Adams, 2014). Therefore if an economic collapse in China occurs then New Zealand’s economy will be affected to a large extent. China can effectively be used as an indication of what is to happen in the New Zealand market, if China collapses then New Zealand is sure to follow. Company investments should be made with this in mind, property prices should be significantly lower in the next few years if Dent’s prediction is correct. Property sales should occur while the nation is in a “bubble” and purchase if possible delayed until possible collapse where they will be cheaper.
Works Cited
Adams, C. (2014, March 21). New Zealand Herald. Retrieved March 26, 2014, from http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11223316
Backhouse, M. (2014, February 21). New Zealand Herald. Retrieved March 12, 2014, from http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11207102
UC Davis. (2010, January 10). UC Davis School of Managment. Retrieved 03 26, 2014, from http://gsm.ucdavis.edu/research/real-estate-bubble-crystal-ball-great-depression-and-manhattan-home-prices