As expected, a winter lull has hit the NZ property market with the number of new properties listed for sale falling in 15 out of 19 regions during the month of June 2018. Falling house prices could be a sign we’re moving into a buyer’s market, and tighter lending criteria continues to constrain the market despite short-term interest rates remaining low. Read on for more in this mid-year property update.
Sellers have gone into hibernation
A spokesperson for real estate listings website, realestate.co.nz, says property sellers have gone into winter hibernation. During the month of June 2018, just 8,136 properties were listed, down nearly 10 per cent on the same time the previous year.
The number of new listings fell in every region in the North Island aside from Wellington, which recorded a 5.5 per cent increase year on year. Asking prices remained stable nationally, but had fallen back to 2017 levels in Auckland.
Realestate.co.nz spokesperson Vanessa Taylor said, “Typically, in winter we hibernate, and this June was no exception with cold weather felt across the country."
"The reality is that people want to sell their property when they feel that it's looking its best and potential buyers are more likely to go out to open homes."
Taylor said buyers were still active in the market, even though sellers were holding back.
House values remain stable
Across the country, none of the major centres saw an increase in property values of more than 0.5 per cent since May 2018, according to QV’s House Price Index.
Dunedin is still NZ’s best performing region recording a 3.2 per cent growth in value in the three months ending in June 2018.
CoreLogic head of research Nick Goodall noted, “There’s no doubt we’ve gone past the peak growth phase of the most recent property cycle.”
“Reduced availability and credit unavailability appears to be limiting what buyers can pay in with an average property value hovering over $750,000. The question now turns to how long the lull will last and whether it will be more than a lull.”
Moving into a buyer’s market
Flattening or falling house prices could mean we are now in a buyer’s market, says Quotable Value, warning that some vendors may have unrealistic expectations about what their property is actually worth.
QV general manager David Nagel said, “The data very much confirms what we're seeing, with values continuing to moderate or drop after a sustained period of growth.”
“It’s a buyer’s market. The Reserve Bank's LVR restrictions, as well as new government regulations, have reduced investor demand," said Nagel.
“This has had the effect of reducing competition, giving buyers more time to do their due diligence before purchasing. As a result, regions such as Auckland are seeing an increasing number of sales through negotiation as opposed to auction as vendors show more flexibility in order to sell their property in a less buoyant market."
Nagel says he expects house values to remain fairly constant or steadily grow across most of New Zealand throughout winter. But he warns sellers not to have an unrealistic view of the value of their property following a sustained period of national value growth.
Seek professional advice
Changes to the property market mean there could be more opportunities for buyers. Shopping around for the right home loan and negotiating on terms will make the difference when it comes to saving dollars. To ensure you’re in the best position financially when it comes to buying your home or investment property, get in touch with a Mortgage Express adviser.
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