Widely touted as the busiest calendar month for the residential property sector, March revealed a renewed confidence across the country, as median sale values lifted, volumes increased and inventory remains stable.
“From Northland to Otago there has been a more lively buyer presence across the residential property sector, and we have seen that sellers are working increasingly to meet the demands of the market by adjusting their price expectations” says Bayleys national residential manager Daniel Coulson.
Yet, while recent sales results released by the Real Estate Institute of New Zealand show 8,504 residential properties have been sold across New Zealand during the month of March (a 35 percent increase on the previous month), the figure is still down 11 percent when contrast year-on-year, indicating that while results have been positive – we are unlikely to experience the same momentum experienced in the latter half of 2016.
Cameron Bagrie, chief economist for the ANZ Bank agrees, stating that while the property market has cooled rapidly, a fundamental mismatch between supply and demand will continue to underpin slow and steady growth with the potential of more momentum later in the year, should economic conditions permit.
However, it is vital that we take a holistic approach to these results, as there may be more complex system at play. Just last month, the REINZ released their newest Housing Price Index (HPI) amidst calls for greater accuracy when addressing inconsistencies in housing data.
Designed in conjunction with the Reserve Bank of New Zealand (RBNZ), the REINZ has applied a sale price to appraisal ratio which they dub the ‘SPAR’ methodology. Designed to produce a more specified analysis taking significant variables such as bedrooms, land and floor area into consideration.
The implementation of this paints a clear picture when presented with anecdotal evidence, homes selling in the top-tier price category are the fastest growing group, thus suggesting that these record sale prices are a little less to do with market buoyancy, and a little more to do with greater interest in property selling over the million-dollar threshold.
“Present housing data paints a confusing picture” says Mr Coulson, who sees that shifting attitudes of buyers and sellers are adding to complications.
“We have entered a changing phase of the market, mixed-media reporting still tells some sellers that they can expect astronomical prices for the sale of their home, however with credit rationing, competition has eased and the market no longer supports this disparity.
“A replenishment of stock has meant that buyers now have more choice than they did up to six months ago, placing greater bargaining power in their hands.
“While prices plough forward, and we are by no means experiencing (or expecting) a market regression, there is a shifting power from seller to buyer and those in the market must remain flexible in order to achieve an optimal sale price.
“Amidst uncertainty in the market, we find that a sale by auction prevails as the most accurate depiction of value as the competition is tangible and sellers are able to directly contrast their expectations to meet the attitudes of buyers, in a bid to secure their ideal sale price” says Mr Coulson.