Here are five things you need to know so you can talk about the property market and not the rugby.
- House price values are stable compared to a year ago but dropping from their peak in November 2021
- It is a buyers (with finance) market
- Sellers still have power as the economy is strong
- Winter is slow in a traditional property market
- Negotiation can be expected when selling, choose a skilled agent
In June, the property market saw a traditional seasonal slowdown in terms of transactions and general activity, marked by less buyers in the market and regional differences in price movements across the country. Despite the majority of media headlines stating a steep decline in the market, this is not happening. In this blog we will go over the key numbers and also cover what is happening on the ground for our offices.
Here are five things you need to know so you can talk about the property market and not the rugby.
House price values are stable compared to a year ago but dropping from their peak in November 2021
Across the country the average price of houses sold in the month of June is up 4.2% compared to the average price in June 2021. This is backed up by The REINZ House Price Index (HPI) for New Zealand, which measures the changing value of residential property nationwide over time, and showed an annual increase of 0.7% for the month. The value of homes did peak in November 2021 and the index does show a drop in average price values since then but there certainly isn’t a “crash” or any sign of a “burst bubble” as some media would have you believe.
It is a buyers (with finance) market
There are currently more homes available for sale than there have been in a long time, up 85% from June 2021 according REINZ. This means it is a buyers market, and to further qualify the type of buyer, it is buyers with pre-approved finance. The banks are still being tight with finance due to Government legislation and uncertainty in the future, so if you are looking to buy you should discuss your finance options with a Mortgage Broker, get pre-approved and then go looking.
Sellers still have power as the economy is strong
The economy is strong. Although there is high inflation, the key drive for economic stability, employment, is high and businesses are not folding or shutting down. The share market might be down, but the share market is not the economy. And there is good news - in the next six months, tourism will increase and supply chain issues are starting to resolve, meaning our primary products will be able to reach the rest of the world. This means there aren’t many people who need to sell their home for financial reasons so there is an option for people to hold out for their price, and you won’t find many discounted bargains.
Winter is slow in the property market - get ready for spring
We are returning to a more traditional market than we have seen in recent years with seasonal activity changes. The number of properties sold in June was down 38% from June 2021, traditionally a very slow month this indicates a return to normality. If this holds true we can expect an upswing in activity and more buyers hitting the market, and more competition for homes over the next 6 months.
Negotiation can be expected, choose a skilled agent
Also in line with a traditional market, where there is a difference in the perception of value between the buyer and the seller, negotiating can be expected as part of the process of selling and buying a home. If you are going sell your home, a sales agent trained in the skill of negotiation will be key to you maximising the sale price of your home.
There are a number of differences in the market across regions, and in some cases, suburbs. As Professionals NZ CEO Shaun Taylor says, “the low number of homes being sold means there is less confidence in the numbers than in past years. Our office owners are telling me that the market is returning to a more traditional market, they are investing in training for their team, and there local stories behind the REINZ numbers at a grass roots level. My advice to buyers is to get your finance sorted through a Mortgage broker first, and to sellers is to find an agent who knows your local market, is skilled in negotiation and is someone you can trust.”
