As we head in to Spring, it’s clear that the property market has shifted. July saw a rebound in sales activity after a slow June, August’s sales volumes remained subdued, however, the market has turned this Spring and buyer interest is increasing.
Shaun Taylor, CEO of Professionals, says, “Although the change in mortgage rates is small, it has changed the sentiment in the market. Buyers are coming back, and they are more serious. Open home numbers are up, and offers are coming in on properties that have been on the market for a while.” Buyers with financing are taking more interest in specific homes, and appraisals are up on existing homes, indicating that movers are looking to put their homes on the market and take their next step on the property ladder. Shaun continues, “One of the biggest changes in the market over the last 18 months is families looking to buy their second or third home decreasing their activity. Movers had stepped back, but now they are contacting our salespeople for appraisals, and I anticipate that this section of the market will be a lot more active in the coming months.”
Currently, the market is characterised by high stock levels of listings, which gives buyers more options. This abundance of choice is keeping prices stable. The Real Estate Institute of New Zealand’s (REINZ) statistics reveal a median price for August of $765,000, a drop of 0.6% compared to the previous year, but higher than the previous month. There is a national average of 50 days to sell, which is historically high and reflective of the large number of homes for sale across the country, with some vendors simply waiting for the market to meet their price.
In addition to elevated listings, the property market is also contending with broader economic factors such as concerns about job security. However, first-home buyers (FHBs) remain resilient, maintaining a strong market presence with a 27% share in August, close to record highs. While purchasing a first home is never easy, FHBs are benefiting from stable house prices, reduced competition from other buyer groups such as investors, and support mechanisms like access to KiwiSaver for deposits.
The broader New Zealand economy remains sluggish; however, inflation is now trending back towards the Reserve Bank of New Zealand’s target band of 1-3%. These factors have led to the RBNZ cutting the Official Cash Rate (OCR) and signalling that this will be the first in a series, with more cuts likely to follow over the next three months. OCR adjustments are expected from the Reserve Bank on 9 October and 27 November. As it stands, ANZ bank is predicting that one-year mortgage rates could drop from the current average of 6.9% to around 5.5% by the middle to end of 2025.
Looking ahead, the remainder of 2024 is shaping up to have a strong finish. Lower mortgage rates will bring buyer groups back to the market. Now could be the best time to buy for the next 5-7 years as we head into the next housing growth cycle.
Top 4 Reasons to Buy or Sell Your Home This Spring
1. High Buyer Interest: With a change in sentiment, buyers are coming back to the market as they see affordability improving. Preparing now ensures you can attract attention in a competitive market.
2. Declining Mortgage Rates: As mortgage rates continue to trend downwards and buyers have certainty of future mortgage payments, we will see stronger competition and better volumes of sales and prices start to lift.
3. Movers and Investors Activity: First-home buyers have been very active over the last few years, but we expect activity from movers and investors to increase. Positioning your home to appeal to “next home” buyers or investors could be a smart move.
4. House Value Stability – For Now: 2024 has been a year of stability and small declines depending on where you live in New Zealand. This means you can plan ahead with certainty. Acting now could help you stay ahead of the market.
Getting ready to sell now puts you in a strong position to take advantage of current market conditions while they are still favourable. The first step should be to contact your local Professionals Real Estate Salesperson. They can provide a free market appraisal for your home and help you navigate the sales process. As Shaun says, “If you want to know what is happening in your local market, talk to one of our team. Our Professionals Salespeople are the best in the business and can give you the right advice as to the value of your home in your market."