Cashed-up buyers face property drought
Cashed-up home buyers and investors are bemoaning a drought of properties currently missing from the real estate market as hesitant vendors adopt a cautious ‘wait and see attitude’ over winter.
Real estate’s traditionally slow winter sales period has been compounded this year by a lack of confidence in the housing market. June figures from the Real Estate Institute of New Zealand show that sales numbers for the month totalled just 4305 – well below the 7474 sales recorded for the same month last year.
Real Estate Institute of New Zealand national president Murray Cleland said much of the drop in sales volume could be attributed to a severe shortage of property ‘stock’ on the market – making buying choices markedly harder.
“It’s certainly noticeable that there are considerably fewer ‘for sale’ signs up outside homes. That’s a trend across New Zealand – from the larger cities through to smaller towns.” Mr Cleland said.
“By comparison, it’s like going onto a giant car lot and seeing just three red Toyotas sitting in the corner. How frustrating if you’re a buyer who wants a blue Honda? Real estate is all about supply and demand – and at the moment there’s demand, but no supply.
“It’s baffling to explain why there’s such a reluctance to sell - there’s certainly no collapse or price ‘slump’ as some areas of the public would wrongly believe. Major factors which motivate sales are still as relevant today as ever were. For some reason though, property just isn’t making its way to the market.”
Managing director of New Zealand’s largest full service real estate agency, Mike Bayley of Bayleys, said many of his sales people had databases brimming with potential buyers who were struggling to find suitable properties.
“There’s no shortage of buyers as far as we’re concerned,” said Mr Bayley. “We have substantial numbers of buyers with money ready to get into the market, yet there simply aren’t the properties out there for them to choose from,” he said.
“We’re not talking about buyers without approved mortgage capabilities… these are astute home owners and investors who are highly liquid, have seen that the market is close to bottoming out after a year of gradual declines, and are looking for somewhere to invest in now.
“Our books are full of these individuals – ex-pats who have returned home cashed up with British pounds or US dollars, investors who sold out at the peak of the market and now see value by re-entering at the other end of the scale, and first-time home buyers who have watched the housing affordability gap close considerably with wages rising and house prices falling.
“Sales people are pulling out all the stops to encourage vendors to get into the market, but the winter malaise has set in. With the official cash rate dropping last week and Reserve Bank governor Alan Bollard hinting at a second round of cuts in September, the conditions are certainly primed for our customary winter phase to end in August rather than October,” Mr Bayley said.