Properties at lower end of market selling faster

5 July 2011

Properties at lower end of market selling faster

Houses at the lower end of the market are currently selling the quickest across New Zealand as buyers take advantage of attractive interest rates, according to First National's monthly residential property survey.

Cheap do-ups, houses targeted at first-home buyers and entry-level family homes rank as the fastest sellers for the majority of First National agencies.

Low mortgage rates presently offered by lenders are regarded by 50% of respondents as the catalyst for the sales and First National offices reported bargain hunters in the market.

First National Group general manager John Stewart says this month's survey is a continuation of a trend, first noted late in 2010, for first-home buyers to be demonstrating increasing confidence that now is a good time to buy.

"First-home buyers realise this is their chance. In most regions, prices have bottomed out and there are more and more multi-offers. The best homes - those that are well presented and well priced - are being cherry-picked," Stewart says.

In tandem with the sales at the cheaper end of the market, another significant proportion of people are upgrading to their second home, so houses in that sector are also selling quickly, the survey shows. High-end properties are top sellers in just 5% of regions.

The survey, which measures listing levels, sales, market trends and overall activity across the network's 70 offices, found house prices had deteriorated further during June compared with May and were also lower compared with June 2010 in 57% of areas where respondents worked.

In June 2010 65% of respondents said prices were lower compared with June 2009, so the June 2011 result of 57% is an improvement.

In the June 2011 survey, three-bedroom homes in particular recorded lower prices compared with a year earlier, excluding the Canterbury region which has seen an increase in three-bedroom house prices.

While half of the First National respondents have reported increased buyer interest and optimism, customers are being particularly choosy as the lower house prices and stimulative lending conditions are not translating into significantly increased real estate sales.

Agents report that buyers are being selective due to a lack of new listings coming on the market and vendors' unattainable expectations.

"A number of homes have been for sale a long time due to vendors retaining unrealistic expectations so the market is stalled," Stewart says.

Listing figures are down 2.4% since May 2011 and down 10% compared with June 2010. Many First National offices report a shortage of properties.

"Many Kiwis mistakenly believe spring is the best time to list their house for sale. Unfortunately, I think these people may miss the opportunity the current market offers," Stewart says.

The number of contracts exchanged in June has fallen from the previous month and a year earlier. Notably, Howick, Blenheim, Hawera appear to be bucking this trend.

Investor activity continues to be low across most of the country, except for the upper South Island, where agents have noted an increase in inquiry for cheaper accommodation.

Looking ahead, Stewart believes the interest shown in the cheaper end of the market now will lead to more sales in the three-bedroom and four-bedroom sector in forthcoming months as buyers upgrade their homes when their present house sells.

"Also, the strength in the rural economy will trickle back to provincial centres and this will influence sales of retirement-style homes in popular centres such as Mount Maunganui, Whakatane, Alexandra, Nelson, the Kapiti Coast and Geraldine.

"These centres are the litmus test as they are likely to be the last market to recover from the recession," Stewart says.

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