New Zealand's property market defy expectations

The latest news release from the Real Estate Institute of New Zealand (REINZ) supports Tommy’s opinion that we are experiencing a period of high demand that is perhaps unprecedented during the winter months. On 14^th August, the REINZ Chief Executive reported “New Zealand’s property market continued to defy expectations in July with sales volumes increasing by 24.6% when compared to the same time last year. This was the largest annual percentage increase in sales volumes we’ve seen for the country since September 2015, highlighting just how confident the market was during July.”

When we look back to the market a decade or so ago, million-dollar house sales were relatively rare. Not so today. In August 2019 there were 820 sales or 13.4% of the total sales in New Zealand, in excess of $1M and this has increased to 1,586 million dollar plus sales, or 20.7% of the total sales, a year later in 2020. This is despite the pandemic lockdown, redundancies and an economic downturn which is now being described as a serious recession. On today’s market, if you don’t have a million dollars to spend then you can forget about living in a number of major city suburbs and other popular locations nationwide. A million dollars buys a fairly basic or humble home in many of our preferred locations. What will it buy this time next year?

The sales figures for properties under $500,000 also make interesting reading with a reverse trend to the $1M price bracket. In August 2019 there were 2,314 sales in the $500,000 and under price bracket while this year, August recorded a reduced number of 1,986 sales in this range. The total sales in all ranges for August increased from 6,132 in 2019 to 7,652 this year despite all the job uncertainty that surrounds us and the pre-election period that has often slowed down house sales in the past. Nothing seems to be stopping the market values and sales numbers marching on.

Watching the recent leader’s debate on television, and following other media comments in recent weeks, neither of the major parties appears to have any real answers to the surging prices other than everyone agrees it seems that we need lots more houses to meet unprecedented demand, and we need them urgently. When asked did they want to see house prices drop, both leaders were somewhat cagey in their responses while expressing a concern that falling prices could leave homeowners who had purchased a home at the top of the market with negative equity. Tommy’s see this as a real possibility and if prices do go into decline or interest rates increase significantly, some recent home buyers would struggle to make ends meet and to protect their equity.

Comments in the Dominion Post of 5th October state “Real estate agents in Lower Hutt say housing stocks are at an all-time low with the lack of supply resulting in record prices … Trade Me figures showed there were 154 houses for sale in the city”. Another Lower Hutt Agent stated “there were only about 100 houses on the market that buyers could move into immediately when unfinished new builds, sections and relocatable homes were taken into account.” Whilst these comments are attributable to the Hutt Valley, they also reflect the situation in many other parts of New Zealand including Wellington City and suburbs.

Tommy’s acknowledge that buying on this market can be difficult and buyers will often be competing in a multiple-offer situation. In these circumstances, buyers need to have confidence that the agent they are working with gives them every opportunity to succeed. In all probability, your agent will advise you to make your best possible offer at the outset as the homeowner would in most circumstances negotiate with the buyer who submits the best offer, first up. A buyer who submits a lower offer may not have an opportunity to negotiate further.

Tommy’s has a rigid policy that whenever there is more than one offer on a property, total confidentiality is observed in the pre-offer period and certainly during negotiations. Negotiations are supervised by an independent person in any multi-offer situation thereby guaranteeing total impartiality. If you have any questions about this part of the home buying/selling process, please ask your Tommy’s agent to explain in detail how the process will be handled. This will avoid any confusion or disappointment if your offer is unsuccessful.

This market demands that both buyers and sellers are market savvy and this is where Tommy’s agent can assist you. We invite you to discuss your real estate plans and aspirations with one of our agents in confidence and free of charge. We are here to help you.