Property Prices Above Expectations In Regions
“Waiting for house prices to fall may not be the best strategy for those keen to buy, with most regions now seeing properties flying out the door and many houses fetching well above any asking price or expectation,” says Derryn Mayne, Owner of Century 21 New Zealand.
Her comments come as REINZ today released September’s REINZ & Tony Alexander Real Estate Survey. Agents report more people are attending auctions and open homes, with listings still in short supply. Far fewer investors now believe that they will find bargains, fewer buyers generally retain fears that prices will fall, and a net 81% of agents say that they are seeing property prices rising.
The Century 21 boss says six months ago economists thought the sky was going to fall when it came to the property market, but many are now revising their ‘doom and gloom’ forecasts.
“Our Covid-19 economy has certainly got a long way to go and the market has been somewhat insulated by the likes of the wage subsidy and mortgage holiday schemes. However, most of our offices in regional New Zealand could not have foreseen such a buoyant spring. It will certainly help set up plenty of activity this coming summer,” says Ms Mayne.
Recently ASB significantly revised its forecast on house price falls. It now expects national house prices will fall by 2.8% by March next year compared to their previous forecast of a 6% drop overall. Others are expecting prices to start rising again in 2021, with economists anticipating the Reserve Bank will cut the Official Cash Rate to below zero next year, pushing already record-low interest rates down further.
Ms Mayne says recent REINZ figures show while Auckland property buyers are paying on average 5% over their 2017 CVs, many regions are paying miles higher with Gisborne seeing residential properties selling on average for 71% higher than current CVs - the highest in the country.
“We are hearing stories, particularly from our Waikato offices, of places selling within days via very competitive multi-offers, with plenty of properties selling well in excess of both the vendors and agents’ expectations.
“Kiwis overseas are buying without seeing properties first-hand, and of course more Kiwis are returning home with foreign exchange to invest. Property remains arguably the safest medium to long-term bet, with housing stock short and rent returns still strong,” she says.
New Zealand’s Century 21 owner says agents are also reporting people keen to move out of the cities, with coastal and lifestyle properties proving popular in the current Covid-19 environment.
“Many people now realise they can work from home very effectively and in many cases more productively and for cheaper. Subsequently, we’re seeing people selling up in the bigger cities, freeing up a bit of equity, and opting for an easier lifestyle with more space and less people.
“What’s more, no overseas holidays in the foreseeable future sees more Kiwi families looking at holiday houses and baches instead, knowing that strong domestic travel will give them good ‘bookabach’ income too,” she says.
Derryn Mayne says one thing every agent and office can agree on is that there’s a general shortage of listings, with any vendor opting to sell their property this spring set to get plenty of market attention.