Property markets move in cycles, ups and downs, ebbs and flows, and we are approaching the peak of interest rates, which means we could be close to the bottom of house values.
We have seen the property market go through the cycle over the last 3 years, as Covid hit and the Reserve Bank swiftly reduced the OCR, banks reduced mortgage rates and property values and activity increased, driven by cheap money and FOMO (Fear Of Missing Out). Then from late 2021 as the Reserve Bank increased the OCR voraciously, the banks followed suit and increased their lending rates ahead of the OCR, which has resulted in a steady decline in sales numbers and property values since the peak of November 2021. We are currently at or close to the peak in lending rates, which means we are at or close to the bottom of price values
The recently released REINZ market data show that at the end of February, the total number of properties on the market and available for sale across New Zealand was 29,083, up 25.0% year-on-year, and up 4.9% from January. The number of residential properties sold in February increased by 40% compared to January, and median sales prices compared to January increased across most of the regions. Auckland saw a 7.0% increase, tipping back over the $1 million price point.
Shaun Taylor, Professionals Chief Executive, thinks this is an early sign of change “the data showing increased activity from January to February this year, a 40% increase in sales and an increase in values is a sign that the market is coming to a turning point and buyers don’t have to be worried about losing any value in the short term. This data also backs up the feedback I have from our owners across the country, that is activity is picking up, buyers and vendors are closer in terms of value expectations, and it is going to be busy few months. There may be an autumnal chill in the air but the property market is warming up.”
The economic data also suggests there is a change, as Shaun explains, “GDP has dropped, we are currently in or close to a technical recession, which will pull back inflation. There is little reason for the Reserve Bank to increase the OCR significantly further, and banks have set mortgage rates ahead of the OCR, they are not going to increase much more. Buyers can confidently plan their future outgoings with stable interest rates and decreasing inflation and will be in a position to confidently buy. Now is a great time to get into the market, buy a first home or trade up.”
Here are our 3 top tips to get into market:
- Research neighbourhoods and homes: Once you have an idea of your budget, you can start researching neighbourhoods and homes that fit your needs. Consider factors such as location, schools, public transport, and proximity to amenities like parks, shopping centres, and restaurants.
- Visit open houses and schedule viewing appointments: Once you've identified a few homes that you're interested in, schedule a tour of each property. Take notes and pictures of each home, and make sure to ask questions about the property, including any repairs or renovations that have been made. You can also attend open houses in the area and go to any auctions to get a feel for the local real estate market of where your are looking to purchase.
- Have your home market appraised: If you are going to sell your home before you buy, choose to get an appraisal on your home to give you an idea of the value of your property in the current market. A qualified Real Estate agent will make a quick visit to your home and then come back to you in 48 hours with a document showing you recent sales of properties near yours, a range for the value of your home, and some ideas that could help you maximise its market value.