Is it the right time to market your home?
Gone is the wild speculation and national double-digit monthly house price inflation that made selling a home or investment a ‘no-brainer’ for many. Instead, sellers are faced with different market conditions and more relative growth rates. Buyers are taking their time and properties take longer to sell due to government regulation changes and financial constraints, all in the name of more financially responsible and stable market conditions.
A sense of calm has prevailed, which will ultimately be a good thing for the long-term prosperity of the residential sector, but what does it mean for those that need to make a selling or purchasing decision right now?
Is the market bottoming out? As a seller should I wait just a little bit? The short answer here is … no. Yes, prices have come off their highs in some regions over the past year, but others have witnessed double digit increases, between 16-19% in Manawatu-Wanganui, Nelson and Otago. Auckland’s dip came on the back of unsustainable price growth that has stretched housing affordability for residents of the City of Sails, but this year prices have started to inch back up, and all indicators point to more financially responsible rises countrywide. There is no reason to suspect a crash is imminent, but why wait for it?
Putting a solid floor underneath these inflationary price increases is the basic equation of supply and demand. Our population is growing; New Zealand has a lack of housing; and our construction industry is severely constrained. With home ownership currently at its lowest level in 60 years, there is pent-up demand for homes, especially among first-home buyers, who have returned strongly to the market this year to take advantage of the more favourable conditions.
Further bolstering price stability is a national lack of inventory. Across the country, the number of houses on the market is pretty much the same as last year, up only 1.1%. And while in Auckland that number did increase, by 4.1%, it’s the lowest increase since 2016. In the regions, inventory has dropped dramatically, down 12% in Marlborough, Manawatu-Wanganui and West Coast and 16% in Southland.
While the market remains strong, there are some headwinds. The extension of the bright-line test and ongoing regulation to prevent foreign buyers will have repercussions going forwards. As will the recommendations of the Tax Working Group. But these policies are targeting investors and should benefit owner-occupiers. Already, in the current climate of risk aversion, banks are actively targeting owner-occupiers and first-home buyers, rather than highly leveraged speculators. And it is important to remember there is a difference between speculators and investors.
While there are contrasting forces at play, there are many positive house price drivers that mean sales activity will be buoyant. Sellers should not to be wary of listing now to get a great result. Key to this will be how well you bought originally, if you over-capitalised on those renovations or if you have unfair expectations of fair market value. That’s not to say it’s a straight forward and not a complex sector and that fluctuations won’t happen along the way, but rest assured, buyers will continue to buy and sellers will continue to sell.