Fewer listings and steady demand are creating a vendor’s market this winter.
Sales activity always lifts in the warmer months of spring and summer making these the best times of year to sell, or does it? As we head into winter, the question becomes: should vendors still consider selling or put it off for a few months?
Although fewer listings are traditionally brought to market during winter, in turn lowering sales numbers, it is important to remember that there is a lot more driving market conditions than just the temperature.
One key driver is supply and demand, the simplest of all economic formulas, but one of the most important that drives prices across all types of markets, from oil and dairy, to timber, iron ore, currency and of course the housing market.
Across the country housing inventory is constrained. Nationally, the number of properties for sale has increased only marginally, up 1.1% on last April’s figures. In Auckland inventory levels have seen their lowest increase for two years, while elsewhere, in the regions, inventory has seen double-digit declines: Southland (16%), Marlborough (12%), West Coast (12%) and Manawatu/Wanganui (11%). It is hard to see these levels of housing inventory changing radically over the next two months.
Pushing against this lack of supply is demand, which continues to grow. The number of homes sold nationally is up nearly 7% on 2017’s figures, according to REINZ’s latest April data. And this demand is putting a solid floor underneath prices, which were up in 14 of our 16 regions.
Driving this demand for residential property are owner-occupiers. They represent over 60% of the market and are growing in number, thanks to natural population growth and immigration. For these buyers, purchasing a new home isn’t primarily an economic decision, it is one driven by lifestyle. Over the years, families grow and children’s schooling requirements change; kids fly the nest, people change jobs, sometimes divorce, grow old and, ultimately, downsize – it’s a circle of life that drives home ownership.
While it is true that some speculators have left the market, due to tighter lending requirements, for long-term investors property is still an attractive proposition. And the ones that remain are facing increased competition from the pent-up demands of those attempting to get their first step on the property ladder. Having watched from the sidelines for the past few years, first-home buyers are now an active part of the market. The relaxation of the loan-to-value ratios have meant that they’ve become more favourable with the banks and represent a greater proportion of new sales lending.
Even in today’s cooler marketplace, the factors of constrained supply and increasing demand are beneficial for vendors. Fewer listings over winter months will always lead to increased demand for desirable properties, and spur buyers to action, for fear of missing out on a dream home. But to maximise the potential of any property on the market, it’s essential to create a bespoke marketing campaign. Advertising must cast the net wide over all prospective buyers – from owner-occupiers and first-home owners to investors – to increase competition and to secure the best price.