Winds Of Change

Some of the forces that have created headwinds for our property market are starting to turn. Interest rates seem to have peaked, and banks are announcing lower fixed term rates. This, because of inflation levels stabilizing back to levels around 3.3% and most economists expecting the OCR to start to be reduced towards the end of this year. Secondly, we are hearing reports from agents in Auckland, our main feeder market, that the wheels are starting to turn once again. I suspect a little more time needs to pass before we see this activity result in sales in our local market. The Brynderwyn’s are open again despite a wee hick-up a couple of weeks ago, also the new coalition government is determined to address the barriers to lowering the cost of housing.

The volume of sales around Kerikeri for the first 6 months of 2024 finished almost level with 2023 and about 26% lower than 2022. The main difference is the significant increase in the proportion of sales under $1million compared to the last 2 years. About 80% of the recent sales are under the 2022 GV compared to 50% at the beginning of the year. Higher numbers of local buyers are taking advantage of lower prices and less competition from buyers moving from out of town. The trend is still for more people looking to scale down than buy up.

Median prices are down about 15 to 20% from their peak levels of September 2022 but price declines appear to be slowing down. Vendors are adjusting their prices to the new market levels or are withdrawing their properties in hope of better prices in the future. This may be a long haul for some if history repeats given it took 8 years for prices to recover to peak levels in the last cycle. Most economists are expecting a U-shaped recovery versus a V-shaped recovery, and we tend to agree.

Our median sales price is still historically high relative to other larger metropolitan centres which saw price corrections occur 9 months earlier. This is good news for those looking to move closer to the city as it is still a favourable time to trade out. However, the price gap is already widening and is likely to widen further as metro markets pick up pace ahead of our own. Just as our peaks lag the peaks in the city, our troughs lag also.

As mentioned previously, people looking to relocate here are cautiously doing their homework and are selective in their buying decisions. Competitive pricing remains of critical importance in this market where there is a wider array of choices for buyers. Accurate and fact-based appraisals are essential. If you are sucked into expecting too high a price by an inexperienced agent in this market, then the cost to you can be tens of thousands of dollars by the time you finally sell at a price the market is prepared to pay. Pricing above market is a losing strategy in a downward market and it is a must to seek out honest, experienced agents who have lived through the ups and downs of property cycles before.

Inventory levels seem to have peaked with around 74 weeks of properties available at current sales rates compared to 85 weeks 2 months ago. Inventory levels are much lower in the under $1million price bracket. We are seeing occasional “multiple offers” on those properties that are competitively priced and well presented.
Bare land is still of little interest to buyers. As existing house and land prices are well below replacement value it is challenging to see how the new build market will pick up until either land becomes much cheaper, construction costs get lower or existing house prices rise. We are not expecting these factors to change much this year.

With some banks reducing interest rates, it is still an opportune time for first home buyers to get in before other buyers return and we have seen a few more attending open homes in recent weeks. Investors are also seizing the chance to selectively buy while prices are low and as more stock becomes available as existing investors “cap out” of their portfolios now the 2-year Brightline period is back in place.

There is never a dull moment in real estate. People always have a reason to move and we are always here to help with "The Team You Know and the Experience You Trust."

Pop in for a coffee and a chat about market conditions and opportunities to achieve your property goals with any of our team at your leisure.