February statistics indicated there was a reduction in the number of houses sold in New Zealand during that month; a trend we suspect has continued into March – although statistical information for March is not available as we prepare this article. The Real Estate Institute of NZ reports that 13 of the 16 regions nationwide recorded a reduction in confirmed sales in February and they attribute this to a number of factors: the raft of recent legislative changes impacting the housing market, an increasing difficulty in accessing finance (despite a record low Official Cash Rate and very low mortgage interest rates) and some vendors’ unrealistic pricing expectations.
Traditionally each year, once children return to school and people return to work after their Christmas – New Year holidays, housing activity picks up. However, February 2019 has been an exception, says the REINZ. The reduction in sales has been likened by the REINZ to the market we expect in the lead up to an election where there is uncertainty surrounding who will be leading the country and what their housing and economic policies may be. Similar uncertainty exists around the final outcome of the Taxation Working Group and their recommendations regarding Capital Gains Tax, changes affecting rental properties and also the reluctance of certain insurance companies to offer cover. These are all matters of concern and have impacted market confidence and day-to-day activity.
From a company perspective, sales in February-March at Tommy’s have continued at acceptable levels but there has definitely been a change in buyer attitudes. Home buyers have generally become more circumspect and are taking longer to make buying decisions. This is influenced by a greater selection of property coming to the market compared with last year, resulting in less competition and less pressure on potential home buyers to make a buying commitment than in the past.
Tips for home sellers:
- The good news for home sellers in Wellington is that, contrary to what is being reported elsewhere in NZ, prices are holding up.
- Even though home buyers are taking more time, there continues to be demand for well-presented and realistically priced property.
- Pricing needs to be realistic as overpriced property tends to languish longer on the market and not attract buyer interest.
- Take care when using Government Valuations as a price guide. GVs can be high or low and often do not reflect true market value.
- Buyers generally have access to a myriad of market data and quickly form their own opinion as to what a property is worth. It is important therefore to provide a realistic price guide that will attract attention yet still allow for a premium price to be obtained in a competitive situation driven by an experienced negotiator.
Tips for home buyers:
- Consult a mortgage broker before serious home viewing begins. This will ensure you are looking in an appropriate price range and they will usually equip you with evidence of finance pre-approval which assists considerably in the negotiating process. Your Tommy’s agent will introduce you to a mortgage broker if required.
- Assess what is affordable and confine your viewing to a specific price bracket. Looking beyond your means can lead to disappointment or to making an over commitment. Assess your needs in terms of bedrooms, living areas and garaging or other features that are important to you.
- Do you own homework or ‘due diligence’, as it is called in real estate parlance!
Talk to the local council, view open homes for purposes of comparison, look at previous sales in the area and use your agent to advantage. Ask the questions and seek responses that satisfy your queries.
- Talk to your solicitor and have any Sale and Purchase Agreement vetted before committing to a home purchase.
- Ensure you have adequate insurance cover before making a final commitment.
- Enjoy living in your own home having taken that first and important step towards long term financial security.