How's the Real Estate Market?

Everybody has their own personal take on what is happening in the real estate market and depending on their circumstances, it will have a major influence on what they believe.
Buyers regularly push the belief that the market is softening because this is what they want to believe. Often, they will actually make a story around the softening market to justify presenting lower offers and playing the waiting game. Sellers on the other hand, always talk the market up and make incredibly strong arguments justifying why their property value is so high. We in real estate, often start with an optimistic seller and observe the changes after they have sold and the overnight transformation into the pessimistic purchaser.

The reality is that the market is the market and it doesn’t really matter how many words you wrap around it, the formula is quite simple. SUPPLY and DEMAND.

In Kerikeri, we observed a very strong market right through 2015 and 2016, and we have to say, 2017 has started a little more sedately. In 2015 and 2016 the market was driven by strong buyer demand (particularly from Auckland), and an increasing shortage of houses available for sale. According to our own sales data which makes up a substantial share of sales in the Kerikeri market, there are over 500 net people (over and above those who have left) living in the area over the last two years. That’s a substantial percentage increase in our population, well above the level anticipated in local authority population growth projections. You only have to drive through town these days or try find a car park to feel the change that has happened. A large number of the new people arriving in the area have been older, retired or semi-retired couples which has helped keep the strain off the local school enrollments. As more jobs are created by service industries that wrap around the growing population and the construction boom continues, then it is likely that even more younger families will move to the area.

This year, our stock levels have improved and buyer demand is steady but not as strong. Buyer motivation to make offers has decreased from peak levels in 2016, with some buyers taking a ‘wait and see’ approach as the media covers stories about lower sales figures in the Auckland area. Consequently, we are witnessing longer days to sell across the market and many auction campaigns are being handed in without the result hoped for by vendors. We have also been seeing some vendors reducing their prices to remain competitive, which is also a sign of the market losing its edge slightly. To be fair, some of this price correction is just unwinding optimistic pricing, as some properties were strategically priced ahead of the rapidly increasing market last year.

We believe the market in Kerikeri, moving forward, will remain steady and here’s why:
- Very strong rental demand
- Shortage of houses under $500,000
- Increasing numbers of retiring baby-boomers
- Record number of new houses being built, creating more jobs in the area
- Shortage of fully serviced sections
- Interest rates have remained low
- Great summer in Northland 2015 – 2016
- Increased number of migrants from regions other than Auckland, as value and sales volumes increase elsewhere e.g. Tauranga
- The most significant driver of the Kerikeri market, is undoubtedly the Auckland property market. Whilst Auckland is experiencing softer buyer demand at present, all economic indicators would point towards this being a temporary slowdown due to strong immigration figures and the strong Auckland job market

Given that nobody has the perfect prediction, it’ll be business as usual for some time. Until more houses are built, stock levels increase and buyer demand softens, we in Kerikeri can enjoy more of the same. So if you’re thinking of buying or selling, call in for a coffee and chat or request a no-obligation, free appraisal – you may be pleasantly surprised!