Selling

Property Market Report

On 14 August and 9 October, the Reserve Bank of New Zealand (RBNZ) cut the OCR (official cash rate) by 25 basis points (bps) to 5.25% and 4.75%  respectively. Kiwi Bank Chief Economist Jarrod Kerr forecasts that the RBNZ will return to a neutral cash rate over the next two years, “We think they’ll cut the OCR from 5.5% to 2.5%, and we expect a cut of 25bps at every RBNZ meeting from here, well into 2026."Interest rates are the largest driver of house prices. Falling interest rates will support the market and we expect steady gains in house prices from here." says Jarrod Kerr.

But what does this mean for the housing market

  • The New Zealand housing market is still struggling, reflected in the Real Estate Institute of New Zealand (REINZ) recording another fall in house prices in July. House prices have gone sideways over the last 12 months (+0.2% year on year).
  • The RBNZ has finally started cutting the official cash rate, which will support the economy, boost confidence and help to stabilise the housing market.
  • However, we still have a chronic shortage of housing in Aotearoa. We need to entice investors back so that developers will follow.
  • When debt-to-income (DTI) restrictions came into effect on 1 July 2024 loan-to-value ratios (LVR) relaxed. They are complementary. DTI restrictions are unlikely to have a meaningful impact as they're introduced, although some borrowers may find it harder to get the loan size they need.
  • When debt-to-income (DTI) restrictions came into effect on 1 July 2024, loan-to-value ratios (LVR) were relaxed.
  • And as investors no longer need to worry about an extended Brightline testor interest deductibility, we should see investors return to the market.

The stockpile of homes for sale sitting on the property market got a little bigger in September, with both Trade Me Property and Realestate.co.nz seeing an increase in the number of homes available for sale on their respective websites.

Trade Me Property reported a 1% increase in total stock for sale in September compared to August, and a whopping 23% increase compared to September last year. Realestate.co.nz's total stock was up 1.5% compared to August and up 27.4% compared to September last year. So there are plenty of homes on the market for potential buyers to choose from, and it seems, more arriving every day.

Vendors appear to be optimistic they will get a good price, with both websites reporting an increase in their average asking prices in September.

Trade Me Property's national average asking price in September was up 0.6% compared to August, while Realestate.co.nz's national average asking price was up a more substantial 4.9% for the month.

We do not know if those increases in average asking prices were due to vendors having more optimistic price expectations, or a slight shift in the mix of properties coming onto the market, or a combination of both.

But the big question hanging over the market now, is whether the increased optimism of vendors will be matched by an increase in enthusiasm from buyers.

We got an early indication on that front last week when Barfoot & Thompson, which is easily the largest real estate agency in the critical Auckland market, released its September sales figures.

These showed buyers were indeed more active in September, with the agency's sales at a four year high for the month, up 10.9% compared to August and up 19.5% compared to September last year.

However the extra commitment from buyers did not result in an increase in selling prices, which headed in the opposite direction.

Barfoot's average selling price declined for the third consecutive month in September and was down 2.4% compared to August. The median selling price also declined for the third consecutive month, and was down 1.9% compared to August. Those figures suggest market activity is picking up in spring, with more buyers and more sellers committing to a sale, but buyers remain cautious on price.

If you are considering listing your property for sale it costs no more to use an experienced agent with a proven track record. A sensible commission structure and excellent advertising program offered to ensure satisfaction. Call me for a no obligation chat on 027 632 0421 or 0800 900 700, Graham McIntyre AREINZ. Country Living Realty Limited t/a Raine and Horne Kumeu - Hobsonville. Licensed REAA2008.

https://www.raineandhorne.co.nz/kumeu/market-appraisal