A review of the last quarter’s property sector activity – and a forecast for kicking off the new year.
As we head into the final few weeks of 2015, the residential property market, for Greater Auckland at least, is slowly returning to some degree of normal trading patterns after navigating through the speed bumps thrown up by a proverbial ‘perfect storm’.
Within a space of weeks, the market saw a meltdown of the Chinese sharemarket leading to a drying up of funding for some New Zealand-domiciled buyers, the implementation of greater foreign exchange controls for funds coming out of China, the near simultaneous introduction of the new investor deposit ratios, and the requirement for IRD and bank account details from purchasers. Throw in the distraction of the All Blacks' sensational run in the Rugby World Cup, and the market’s attention was definitely elsewhere.
The market took a breather – as reflected by a noticeable dip in ‘under the hammer’ auction clearance rates for homes in the lower entry-level to mid-price ranges. Now, with a more circumspect approach, activity in both listing numbers and sales volumes is on the rise again as we enter the traditional pre-Christmas selling period.
Many sellers though are now having to re-evaluate their pricing expectations in line with buyers’ budgets.
Buyers, as is usual for this time of year, also have more stock to choose from now, and are consequently negotiating harder, and in some cases are even willing to walk away from what they deem to be over-valued listings. Previously we would have seen competitive auction bidding or multi-offers being presented. Combined, these factors have seen prices begin to stabilise.
The residential property market, like most Aucklanders, literally goes on holiday over the Christmas/New Year break, and we see little reason why this would not be the case over the pending 2015/2016 festive season.
Given the drivers of the residential property market – net migration numbers, low interest rates and high employment levels – all seem to be on an even keel, market activity should resume in the second week of 2016. That momentum should build up a steady, if somewhat less spectacular than last year, head of steam throughout February and March.
Browse the December edition of Preview here.