Each month, the Real Estate Institute of NZ (REINZ) releases a report that analyses the latest trends in the residential, rural and lifestyle real estate markets. This sales data is supported by comments from the REINZ CEO including opinions and projections of the future. Tommy’s main interest of course, is in our specialty area, residential real estate, and it is an opportunity to compare national facts and figures with our own results and trends for the preceding month. The latest report from the REINZ issued 14th October and covering market activity for the month of September highlights some interesting trends. In this article we will share some information from this report coupled with our own results and observations for September.
HOUSE PRICES: REINZ report that median prices for residential property across New Zealand increased by 15.4% to $795,000 in September 2021 compared to $689,000 in September 2020. Seven out of 16 regions reached new record median prices. For the same period, the median sale price in the Wellington District increased by 13.7% to $845,000. Of interest is the fact that in September 2020 18.8% of Wellington District sales were over $1M while in September 2021 36% of all sales were in excess of $1M. As a general observation, Tommy’s see little change in October/November from previous months with premium prices still being achieved for premium properties.
SALES VOLUME: The number of residential property sales across New Zealand decreased by 37.9% from 8,673 in September 2020 to 5,385 in September 2021. This trend is thought to be the result of varying lock-down alert levels across the country impacting on buyer confidence and with travel limitations curtailing real estate activity. A significant percentage of this reduction in sales was understandably attributed to the Auckland region. The sales count for the Wellington region (including the Kapiti Coast, Hutt Valley and Wairarapa) was down by 15% year-on-year.
TIME TAKING TO SELL: In line with the national trend, the median time to sell in Wellington has increased by 15 days from 26 days in September 2020 to 41 in September 2021. Of course, many homes will continue to sell in a shorter time frame, but homeowners should generally allow a little extra time in their forward planning so don’t be surprised if your listing agent suggests a slightly longer time frame than we have witnessed in recent times!
SUPPLY AND DEMAND: To quote from the REINZ press release “The volume of inventory available continues to inhibit activity in the market. While inventory levels were down year-on-year, we have seen an increase when compared to August 2021.” This is of course to be expected as we morphed from winter into spring in September and it will surprise if our housing stocks don’t continue to rise through to the summer months. We believe that the Auckland area lock-down has had an impact on real estate activity in Wellington and elsewhere throughout the country. However with thousands of Kiwis still trying to get back home and rehoused, we can’t see any major change to the strong demand that currently exists.
OFFICIAL CASH RATE AND INTEREST RATES: As was widely predicted, the Reserve Bank has recently adjusted the Official Cash Rate (OCR) upwards by 0.25%, a move that came as no surprise to market followers. As was expected, the major lending institutions were quick to adjust mortgage rates on the back of the OCR adjustment. This is unlikely to impact on current market activity, but buyers and borrowers of mortgage finance will be closely watching future reviews of the OCR. The popular opinion of market commentators is that further increases are likely.
AGENT SELECTION: Choosing an agent to handle the sale of your home can be a difficult decision at the best of times. This task is further complicated by the fact that the number of agents increased exponentially in the last year. The governing body for our industry, the Real Estate Agents Authority (REA) reports that the number of new real estate agents jumped by 54% in the last financial year; a huge influx of new people looking to take advantage of a buoyant market with record breaking sales levels. Beware however that many agents fail to make a successful transition into real estate and historically 21% of new licensees are no longer active after one year with the fallout rate increasing to 33% after two years. Tommy’s is proud of our staff retention rate which far exceeds industry averages.
What we can learn from these statistics though is the need to make your agent selection based on the following considerations: –
- How well established is the agent and what support do they have?
- Does the agent’s company have a proven track record over a number of years?
- Is there adequate management support, particularly for inexperienced agents?
- Has the agency been successful in your suburb or locality in the last year?
- Are you comfortable with the agent you select? You will be seeing a lot of each other during the sales process.
We believe that Tommy’s tick all the above boxes and we will strive to give you, the homeowner, the best possible result. Finally, beware of the agent that has the highest price expectations; decide if these expectations are realistic. Ambition is great but overpricing often points to one of two possibilities, inexperience or deception. At Tommy’s, our objective over the last 20+ years has been to make the sales process seamless and to obtain the best possible price for you.