Waikato Business News July/August 2023

14 WAIKATO BUSINESS NEWS, JULY/AUGUST 2023
Noughts and crosses - is the property
market swinging from over to under-supply?
I seem to love talking about circles
and cycles, but this month’s column
is centred around the opposite - the
cross-shaped graph of supply and
demand, with equilibrium sitting
smack in the centre.
It’s a simple economic
concept, and it’s one that’s
become synonymous with
the property market in recent
years. Kiwis flooded home
during and immediately after
the height of the COVID-19
pandemic, which impacted the
demand for housing here in
New Zealand and caused house
prices to increase at unprecedented
rates.
But what’s interesting about
this is how quickly the pendulum
is swinging back, and
how “lower supply and higher
demand” is now starting to
affect how property is priced.
For the first time in nearly
two years I heard an agent
this week say, “we haven’t got
enough properties to sell”,
and this characteristic is being
driven by a few factors I find
quite interesting.
Economic commentators
and even the RBNZ have
started rhetoric that the bottom
of the property market
has been and gone this cycle,
and this is starting to spread
its tendrils out into the mainstream
media. A self-fulfilling
prophecy is encouraging more
people to take action and bank
some early equity as prices look
ready to rebound back to equilibrium
and beyond.
There is no doubt that the
Government’s efforts to bring
more skilled workers into the
country have resulted in a shortage
of housing. In response,
there are more agents reporting
multi-offers on properties, particularly
in the bottom to middle
of the market where buyers
don’t need to sell a property
to make their purchase work,
and offshore cash is making its
way into the housing market to
allow new immigrants to set up
a new life in New Zealand.
We’re hearing more and
BEYOND THE
BANKS
BY CLAIRE WILLIAMSON
Claire Williamson is a mortgage
advisor for My Mortgage
more that first home buyers are
lining up to get into the property
market. This follows changes in
June that have made it a bit easier
to purchase properties with
lower deposits, as well as some
lesser-known changes to the
First Home Partner scheme,
where Kainga Ora is supporting
more buyers with equity deposits
and extending these to existing
properties rather than just
new builds.
This is more pronounced
than it was in previous months
as the effect of a swing towards
a slight shortage of properties
heading into a traditionally
busy time of the year is causing
competition in the mid-range
valued properties. More buyers
are finding themselves needing
to get their ducks in a row so
they’re in with a chance.
In August the Reserve Bank
kept the OCR on hold, but
interestingly also signalled that
they wouldn’t hesitate to hold
rates up at the current level for
an extended period, which is
likely to preclude a rate drop
before the middle of 2024,
and even another small rise
if needed.
Fixed rates have remained
largely unchanged, albeit a few
banks are discounting rates
for strong clients. Relatively
short terms continue to be solid
options for many borrowers,
but it’s worth considering the
level of risk you’re willing to
take in a still-uncertain rate
market where they may remain
higher for longer, and there is
a fractional move towards 18
months to two-year periods.
An uptick in demand is
underpinned by some uncertainty.
The political race is
on with only six weeks till an
all-important general election,
where perceived Government
overspending, inflation, cost
of living and interest rate hikes
have all been big conversations
amongst political leaders.
Investors and speculative
developers have stepped back
for the past few years as affordability
has tightened, and given
the high demand for rental
housing, they are ready to
re-enter the market if interest
deductibility is reinstated.
So - how do we win this
game of noughts and crosses?
Beware, beware how you compare…
Capturing the consumer
dollar can be a challenge
at the best
of times.
At the worst of times, such
as arguably those New Zealand
is experiencing at the moment,
it can be even harder.
It is not surprising then
that to maximise their chances
of capturing the dollar, businesses
might undertake what
in legal speak is called comparative
advertising. That is,
advertising in which either a
business states that its products
(usually) are compatible
with another brand’s products,
or a business compares
its goods (or services) to the
goods (or services) of one or
more competitors, highlighting
the benefits of that business’s
goods over the competitors’.
The benefits might be
lower price, greater value, better
performance or durability,
for example.
Done right, comparative
advertising can be very successful,
achieving brand switch
and long-term loyalty. Just ask
Whittaker’s and potentially
Pak’nSave (Kiwis will know
what I mean here…).
Done wrong, and you can
infringe registered trade mark
rights (if you use a competitor’s
trading name or logo in
your ad) and/or breach New
INTELLECTUAL
PROPERTY ISSUES
BY BEN CAIN
Ben Cain is a Senior Associate
at James & Wells and a
Resolution Institute-accredited
mediator. He can be contacted
at 07 957 5660 (Hamilton),
07 928 4470 (Tauranga) and
benc@jaws.co.nz.
Zealand’s Fair Trading Act
1986 and Advertising Standards
Code.
A well-publicised recent
example of where a business
‘got it wrong’ in New Zealand
involves the kiwi toy company,
Zuru 1 , and the world famous
brickmaker, Lego 2 . Zuru had
used the LEGO word mark on
packaging for its own ‘MAX
Build More’ toy bricks to
advertise they were compatible
with Lego branded bricks.
Lego had not consented to
Zuru’s use and, to cut a long
legal story short, sued Zuru
for trade mark infringement,
passing off and breach of the
Fair Trading Act.
Although it failed on its
passing off and Fair Trading
Act claims, Lego did succeed
on its trade mark infringement
claim on the grounds Zuru did
not use the LEGO trade mark
in accordance with honest
practices in commercial matters
and its use took unfair
advantage of the LEGO trade
mark. Further, it was not reasonably
necessary for Zuru to
use the LEGO trade mark in
such a prominent way on the
front panels of its containers
and packaging to indicate
either a characteristic of its
products or the intended purpose
of its products.
Outside the world of toy
bricks, I am aware of two
other recent examples where
competitors have undertaken
questionable comparative
advertising. Due to client confidentiality,
I am unable to
divulge further details. It suffices
to say however that when
scrutinised, the comparisons
– which involved comparisons
of product features – did not
stack up: quite the opposite,
the comparisons were fundamentally
flawed and, should
they have been tested in a
court, would, I venture, been
found so.
There are, I perceive, four
key ‘rules’ when it comes to
comparative advertising:
1. If making compatibility
statements, like Zuru, ask
yourself (and sense check
with others) whether using
your competitor’s name or
logo is really necessary. A
good rule of thumb might
be, ‘If in doubt, leave it out’.
2. If comparing goods or
services, compare apples
with apples, not apples
with pears and, worse still,
lemons;
3. If you are questioned, make
sure you can wholly justify
the claims you make in
your advertising; and
4. If you are in any doubt, seek
appropriate legal advice.
Forewarned is forearmed.
1. Zuru New Zealand Limited
and Zuru Toys New Zealand
Limited, to be precise.
2. Lego Juris A/S and Lego
A/S, to be precise.