Much of the heat has gone, but a calmer housing market has its advantages for buyers and sellers who are prepared to think longer-term and adjust their strategies.
After New Zealand’s third-hottest summer the temperatures are easing back and autumn is upon us. But despite the change of season, the odds are against a sudden lurch to winter as meteorologists predict a milder than average few months.
Much the same can be said about the Auckland housing market: the days of white-hot activity and soaring prices are over, replaced by market conditions which are cooler, calmer and more stable – but not falling through the floor.
March saw a small drop in the average asking price in Auckland, according to realestate.co.nz, but overall values are holding firm – underpinned by favourable economic factors including strong inward migration, a healthy job market and low interest rates.
Perhaps the figure that best illustrates today’s quieter market activity is the time it takes to sell: in February the median number of days to sell an Auckland home lifted to 57, from 49 a year ago, according to the Real Estate Institute. Nationally, the figure rose by three days to 47, while the number of residential properties sold fell by 9.5 percent year-on-year.
“What this reflects in part is a difference in views between buyers and sellers around where the market currently sits,” says Daniel Coulson, Bayleys’ national residential manager. “And this has increasingly come to the fore as the heat comes out of the market.”
After several years where values were rising rapidly, a steadier market means buyers are now feeling like they have a bit more influence than they had in the past, says Coulson.
“But while vendors might underestimate how much the market has changed, often buyers will tend to overestimate the changes.”
Coulson believes these differing views will eventually reach an equilibrium, “but for now the effect is that it’s taking a bit longer to sell”.
“The advantage is that people can now take a more considered approach, without the rushed, pressured environment many experience when the market is running hot.”
With a greater choice of properties for sale, and less “fear of missing out”, buyers have more time to search, conduct due diligence and negotiate a better deal.
However, Coulson says they should still understand that good, well-presented properties in desirable locations will always attract attention.
“Sometimes buyers are so intent on exploring all the options and seeking out the very best deal that they miss out on the property they want – because someone else is prepared to act decisively and pay what it’s worth.”
Maximising the return on your investment in a steady market calls, more than ever, for a longer-term view and strategies to identify and realise the sometimes hidden potential in property.
For homeowners, this can include adding value by investing in carefully-considered renovations.