Following one of the biggest periods of a property boom Kiwis have ever seen, residential sales activity paused for breath over winter.

But, with the market now adapted to new conditions and warmer weather on the horizon, all signs point to a bumper spring as sellers take advantage of new stock and market momentum.

MOOD OF THE MARKET

Sales activity across the country continues to reach new heights with data from the Real Estate Institute of New Zealand (REINZ) showing 20 districts achieving new record median highs.

Where targeted policy changes have seen fewer investors seeking new stock for now, a severe imbalance between existing supply and persistent demand continues to see other buyer classes support value growth.

While residential property prices keep rising, anecdotal evidence suggests a severe shortage of supply has actually hampered sales activity over the winter months.

Salespeople from all corners of the country have been reporting an element of reticence to sell before their homeowners have a new property lined up.

Historically the busiest period on the calendar year for residential sales activity, warmer weather and impending deadlines are set to offer fresh incentives for sellers.

Replenishment of stock and more choice on the market offers impetus for those on the edge of the market to make their move before year-end.

FINANCIAL CONDITIONS

Despite keeping the Official Cash Rate (OCR) on hold at the record low level of 0.25 per cent, an improving global economic outlook and New Zealand’s own better-than-expected performance has seen revised expectations for interest rates by the new year.

In its latest Monetary Policy Statement (MPS) the Reserve Bank of New Zealand (RBNZ) chose to end its Large-Scale Asset Purchase (LSAP) programme, sending the clear message that monetary policy is expected to tighten from here on out.

Already, New Zealand’s biggest banks have increased fixed-term mortgage rates, with floating rates likely to follow suit once a change in the OCR is authorised.

The pressure of changing financial conditions adds another dimension to residential real estate dynamics, with savvy sellers keen to lock in near-record low interest rates before we see them take off in an upward trajectory.

REGULATORY CHANGES

Government housing announcements made at the end of March set a cat amongst the residential real estate pigeons, as property investors sought advice about what new tax reforms meant for their businesses.

While extending the Bright-Line Test from five to 10 years was somewhat expected, the exemption of new-build homes offers a reprieve for property investors, and a new avenue for this buyer class to explore.

Despite this, news that investors would no longer be able to offset interest expenses against rental income when calculating tax has caused the biggest stir, especially as the policy went against advice from Treasury and the Inland Revenue Department (IRD).

Perhaps encouraged by the five-year phase-in date for the end of interest deducibility, property investors are, however, still active, albeit at a slower and more measured pace than the previous frenzied highs.

Strategic policy changes aimed at cooling investor activity have offered some property purchasers previously waiting in the wings, the chance to step up and seriously start their search for a new home.

We’re picking this heightened interest from first home buyers, movers, and families will see fervent activity through the more agreeable spring months as sales activity kicks up a notch thanks to renewed appetites, deadlines including crunching credit conditions and warmer spring weather.

SEASONAL BENEFITS

Longer daylight hours offering more exposure to sunshine have been shown to increase our mood and motivation, creating greater incentive to tick off the big things on our to-do lists.

Where existing homeowners traditionally undertake add-value renovations, perhaps preparing their homes for sale, open home and auction attendance rises with more buyers motivated to see homes in their best seasonal light.

Garden growth and sun-drenched living spaces support buyers to envisage their life in a home, while sellers previously nervous about making their move can take encouragement from more choice on the market for sale.

Yet, spring offers another reason to get up and go, with a looming new year offering sellers a reason to seek an unconditional sale before year-end.

Historically, auction activity rises during the warmer months, as more sellers look to the unconditional, deadline nature of a sale by auction to wrap up their homes pre-Christmas.

To hear more about how Bayleys can maximise your sale price by harnessing the seasonal advantage of spring, your local sales office welcomes your call.