Sunday 4 January 2015

Manager's Comments 5-01-15

2015, the Crystal ball.

With the continuation of activity from October, November and December we expect 2015 to start with a good level of real estate activity from both sellers and buyers. Interest rates are steady, employment is high, and banks are coming to the party and the election is old news. However there are two elephants in the room as they say.

Firstly, Fonterra’s payout has plummeted. 2014 was $8.30. 2015 is forecast by Fonterra to be over 43% down to $4.70 this year. That will trickle through the Taranaki economy as farmers stop spending, as they must if milk solids prices don’t improve.

Also, the energy sector is hard hit by rapidly falling oil prices and huge over supply. Speculative exploration is no longer financially viable. Activity in our energy sector will slow down in 2015. This will bring pressure to the rental market particularly, and real estate sales generally if people begin to leave town and we see a surplus of stock. The opposite of where we have been for 2or 3 years.

Neither of these situations may last. These are both dynamic and volatile markets which can change over night. Harcourts still expect a good steady 2015 in real estate sales, but the balance is precarious and the future is uncertain. 


John Christiansen