First National wonders if SCF investors will deploy their NZ$1.6 billion windfall into property rather than into banks

Could South Canterbury Finance (SCF) investors use their NZ$1.6 billion of immediate cash repayments from the government to invest in property?

Real estate agency First National has suggested many investors may choose to invest their cash in property rather than in banks.

"The recent rescue of SCF investors by the Government may provide a much-needed catalyst for the property market," First National Group general manager John Stewart said.


"With the demise of SCF, investors soon to be repaid by the Government will face a new dilemma. Where should they put their money now? "Is their money safer in the bank? Or will they inject it directly into property?," Stewart asked in a statement.

“No doubt both sectors will be waiting for these decisions with bated breath. If the banks have a cash injection from investors that could loosen the mortgage reins, with positive flow on effects to the property market. If investors put it straight into property, it may kick start the building, the buying and the selling," he said.

"Either way, the Government's rescue package may be the catalyst that Spring has not yet provided for the country's property market."


First National also released its monthly survey of around 450 sales people in 70 offices nationwide, including buyer enquiry indicators, sales volumes, listing level measures, and buying and selling trends.

'Prices falling, volumes weak'

It showed prices continued to drop last month in 57% of its offices and that sales volumes were lower in August than First National's 12 month average.

Here are the results below.

August was a very quiet month for sales and although buyers were reported as being in the driver's seat, finance and confidence were both key issues.

Just over 84% of respondents reported buyers’ access to finance was not improving, with around 10% reporting lending conditions were easing for their buyers.

Summary of survey findings:

Prices

House prices continued to drop from last month in 57% of the offices.

Some agents reported that vendors were now basing offer acceptance on their ability to service existing mortgages rather than making a profit. In 42% percent of regions prices were the same as they had been in July.

Just 1% of offices reported price increases and these only involved 4 bedroom properties. Volumes: Sales volumes were lower in August than First National’s 12-month average. Fifteen percent of offices sold more properties compared to August last year but 56% of offices sold fewer and 29% sold the same number.

Listings:

Listing levels continued to tighten as people took their homes off the market. Nationwide, 57% of offices reported having fewer listings compared to this time last year (10 more than last month). However 35% of offices saw an increase of listings compared to the same time last year and listing levels in 13% of offices were unchanged.

Buyer enquiry

Buyer enquiry levels were significantly lower than the same time last year in 58% of the offices and moderately lower in 23% of offices. Buyer enquiry was higher than August last year in just 3% of offices. For the first time since January, website enquiry over the past two weeks had dropped below the same time last year, to 73,000, around 5000 visits below August 2009. In May this year, web visits per day peaked at around 130,000, 45,000 visits per day higher than May 09.