Change is a word many people inwardly shudder a bit with as most of us are hardwired to be a little resistant to change. Humans generally like consistency and predictability, not big surprises!
But the world and life in general, seems to be changing more and more nowadays, and technology and the CV-19 Virus have created great change worldwide. Many commentators say the world will never be the same again due to the impact of the CV19 pandemic.
In NZ, we have had and will continue to do so for a year or more, massive change due to the economic fallout of the lockdown. In real estate, the banks have gone into “Mortgage War” status as each tries to win more market share from the other with lower mortgage interest rates being announced every week.
This is REALLY good for householders borrowing money with the rates now lower than any time since World War 2! This is the “silver lining” in the crisis that has hit us. This change is a very positive one. For investors, interest cost is easily the biggest cost so this makes many more properties, including new houses of a medium density type cashflow positive as investments! And for First Home Buyers, the removal of LVR ratios are another advantage although some banks are still cautious about FHB’s if they have lower incomes. It may well be the real benefit of lower rates and no LVR rules may not flow through until 2021 by which time banks’ lending policies may not be as cautious as right now?
However, property will remain the investment product of choice for most people, especially in the 4 main cites which will attract more people looking for jobs if unemployment rises as is expected. Shares and term deposits don’t feel as solid to most Kiwis as bricks and mortar!
Other changes are happening on the political scene and with an election in September, things are about to heat up. What party is best equipped to lead NZ out of the economic position we find ourselves in now? Credibility and maybe the ability to shoot themselves less in the foot than other politicians may be who wins this race! Certainly, it will be very interesting time over the next 4 months politically – there is also the US election coming up in November which will have a major impact upon the world view of USA and its policies that do ripple across the globe. “A week is a long time in politics” is a famous and well known saying and so change is bound to occur every week up until polling day. Labour will have on one hand the ability to claim a CV19 positive outcome that ranks in the top 5 in the world. National will claim they are better at economic policy and recovery. What will Winston claim? What will the voters decide?
In the workplace, some of the economic impact has been offset by the wage subsidy and with that being extended until September (if your business can show a 50% decline in revenue), some job losses may not occur immediately as companies try to hang on and get through. This could be delaying the inevitable for some businesses but might save many others. However, many larger companies have already taken steps they see as inevitable for their own company and Burger King NZ is in liquidation, as well as Bauer Media, publisher of many top NZ magazines and large entities like Air NZ, Fletchers, Sky City to name a few have announced layoffs of thousands of people. Tony Alexander fears smaller business with possibly less advance foresight will hand on to long before taking tough decisions and that slowness of decision making may cost them much more than making the tough calls now. Treasury anticipates possibly 10% unemployment in NZ by December 2020 so tough times are close by.
However, NZ as a country that was for a long time, far from the rest of the world before technology and air travel sped up, and is a resilient populace so whilst there will be loss and pain, the “kiwi spirt” normally does get through so while this will be a challenge for many people under 30, older generations have been through tough times before.
Wisdom comes with experience and in most cases, this is what helps best when navigating tough times – we ourselves at Mars pride ourselves on the many decades of experience we have with our very close, bilingual team and remain here to help anyone in whatever circumstances they find themselves, often for reasons that were completely out of their control.
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