Below Expectations: Is the property market BOOM over?
When the music stops it normally signals the end of the party.
New Zealand has experienced a fantastic real estate party over the last three years with the Wellington market moving around 40 – 50% during that time. Now that’s a lot of growth in a short period, but if averaged out over the last decade it only works out to be around 5% per annum. Are we seeing the end of the real estate party in Wellington? Maybe not, but let’s just say the volume’s been turned down and some of the guests are putting on their coats. Simply said, the market is in transition with some vendors a bit slower to adjust.
So what can you expect right now?
The multi-offer good times? Reined in
Any agent working during the boom will have witnessed, first-hand, the tears and whoops of joy as ecstatic vendors sold their homes for record setting prices. It was the norm to receive multiple offers on every property, with one colleague receiving over sixty offers at a tender (ridiculous I know!). As we move into a less feverish market – think vintage 2014 – a good result will net around three to four offers. Yes, it can feel like a great compliment to receive twenty plus offers on your home but it only takes two to create competition and only one buyer can be the winner on the day. So for now, the market is still tipped in the vendors’ favour. It’s hanging in the balance though, and that balance is likely to tip at some stage; we’ll keep you posted.
More predictable price spread – Offering at a deadline
Another indication of a red-hot market is a large spread of offers, often with one top offer that blows the rest away. It’s the Lance Armstrong of offers – so unnaturally good it means the market’s really worked itself into a frenzy and buyers are willing to act in desperation to secure the deal.
Those frantic times have passed, which is helpful for buyers because it means values are more predictable. It is more common these days that the difference between winning and losing is a matter of thousands, not tens of thousands. That means you should look for ways to find an extra $5,000 or even $1,000 for your offer if you can. Being beaten by $20,000 is annoying but you just shrug. Being beaten by $1,000 is infuriating, especially if you had more to offer. Living with a close loss is much easier when you know you have put down every red cent.
Misleading numbers… boring statistics alert
Regular readers and market watchers will know that real estate data is generally well behind the current market. By the time a property actually settles, it might be months after it sold. And while asking price data is entertaining, it may only indicate a load of overly optimistic vendors.
A recent article which raised a few eyebrows around here was about how Wellington asking prices have risen more than 12% year-on-year. Since we’re not seeing that, and none of our colleagues are seeing that, we struggled to make sense of it. Then we remembered that the data is based on properties advertised with asking prices only, like ‘buyer enquiry over’. Here’s our conclusion; in a booming market, asking prices aren’t a common method of sale and were previously used mainly at the lower end of the market, with middle and upper end properties selling by deadline sale, tender or auction. Of late we’ve seen a boost in the number of ‘buyer enquiry over’ properties, with that pricing extending into the middle and even upper ends of the market. That’s dragged up the average asking price dramatically even though we know selling prices are officially only up 8.5% year-on-year and is likely a reflection of last summers’ growth with prices having plateaued over winter.
It’s a marathon, not a sprint – What’s the market doing?
Yes, if you had sold your property in February it may have fetched a peak price but it’s probably not going to get that same price today. However, always remember that if you’re not buying or selling, relatively minor changes in the value of your house are pretty much irrelevant and buying and selling in the same market is more often than not a neutral exercise. Over the long term, property prices increase. It’s a marathon, not a sprint. Aim to buy something you can afford to keep, so you won’t be forced out of the market, and you will be a winner in the long run.
Wellington Real Estate Market
It’s that time of year again when the market heats up in the run into Christmas. November produces a lot of listings as the family homes start to hit the market in preparation for the new school year. As indicated in this month’s barometer the market is going through a change to a more balanced state, this will result in days on the market pushing out with more stock and a reduced buyer pool.
We are still receiving multiple offers on many properties so if you are thinking about selling, the ball is in your court.
WELLINGTON MARKET QUICK FACTS
Average sale price by Ward:
What’s on this November in Wellington:
- NZ Irish Fest, Multiple Venues Wellington, Wellington
Kiwis love the Irish, and with over 600, 000 New Zealanders claiming Irish ancestry, it’s no wonder. Yet there has never been a National Irish Festival in New Zealand, until now. For the first time, this November, Kiwis and Irish alike, will come together to celebrate everything Irish with a massive four-day celebration, with over sixty events, across three cities, as part of the inaugural NZ Irish Fest. Click here to book your tickets
- Cool Sh*t Happens – Pop Up Store, 134 Vivian Street, Wellington
Cool Sh*t Happens is an 8 week pop up store run by 8 young local Wellington designers, who have come together to make sh*t happen! Our pop up store has a range of local handmade art, jewellery, clothing, plants, gifts, and more. Click here to for dates and open time
- Splash 2018 – National Exhibition of Watercolour Paintings, New Zealand Academy of Fine Arts, 1 Queens Wharf, Wellington
Two annual exhibitions, Splash and Ceramicus, both highlights of the Wellington arts calendar, have again come together to present a treat for Wellington art lovers. The best of New Zealand watercolour paintings will be exhibited together with the best of new ceramic art created by members of the Wellington Potters’ Association. Splash 2018 + Ceramicus is where some of the best New Zealand art comes together to be enjoyed and to inspire. The exhibition offers a feast for Wellington art lovers, it’s an exhibition you won’t want to miss. Click here to find out more
If you, or anyone you know, could benefit from a considered market assessment by Wellington’s only licensed agent and registered property valuer, please do not hesitate to call. We are always very happy to help.