While the real estate market takes a topsy-turvy ride in most parts of the country, we ask (and answer) the questions many are asking.
In keeping with market cycles, the last 12 months residential real estate has experienced significant downward momentum. We will probably still experience a small amount of pressure but nothing like the decline of 2022. So, while some buyers desert the market, we ask, is it still possible to make some capital gains/profits in real estate?
The old adage is location, location, location. They even created top rating TV shows with the same title. Location of property, like bars and restaurants, means some attract all the customers while those in far flung areas can struggle. Buying real estate in the most popular suburbs protects you in the same way. This is because the highest demand will centre around those suburbs, even in a flat market. Thenceforth the first properties to experience the next upward swing are those that are well located.
Buyers value what they see. If it doesn’t appeal to the eye it’s unlikely that the buyer will see value. Due to inflationary pressures in the construction industry and the fall in the market; expensive, time-consuming alterations/renovations present a fear in over capitalising. This means a quick face lift is the best approach. This might include on trend colour schemes, new carpet and/or a quick upgrade of the key service areas. If buyers like what they see and can connect with it, they are likely to offer more money.
Avoid the deferred maintenance
Spending money on maintenance items may not be enjoyable, but it is necessary. Buyers should avoid these costs, unless the discount on the purchase price creates a large enough margin. This is an important consideration particularly in a flat market because growth in a rising market will offset any extra money required to deal with that deferred maintenance. If the foundations, cladding, and roof are good, you’re off to a good start.
While the final choice for buyers comes down to a gut feel, buying real estate with good fundamentals will put you at the top of the list should you resell. This includes good sun, good access, some form of off-street parking, indoor/outdoor flow and a usable section. Having good fundamentals means a cheap facelift is an easy fix. Structural issues and spaces which need re-configuring will always limit the appeal. The overwhelming feedback from buyers who decide not to offer on our homes comes down to the fundamentals. You can change the house, you can’t change it’s position.
Can the property pivot?
Like the stock market, real estate has markets within markets. The investment sector of the market has been struggling for a while now. The CCCFA, Brightline and LVR ratios have made it very difficult to sell and buy investments. And the willingness of banks to lend is the nail in the coffin. The key with any property is to see if it can pivot in the market. Can an investment be turned into a first home or downsize option? Can a family home become an investment? Properties with wider market appeal will always have a better chance of selling in any market.
The Wellington Market
It’s no secret that the Wellington market has just been through the toughest 12 months on record. In good news activity we have seen the buyers out in force over the last couple of weeks. This includes a large portion of new buyers which is always promising. While there may be a bit more downward pressure to come, it is starting to feel like the decline started to slow significantly around November last year.
It has been nice to return to a city full of hope post the summer break. It almost feels like Wellington is getting it’s mojo back. Here’s to a cracking 2023.
Wellington Market Quick Stats
What’s On This February In Wellington?
Wellington Pasifika Festival, Waitangi Park, 11 Feb 2023
Experience the sights, sounds, and flavours of the Pacific at a free one-day festival celebrating our unique Pasifika communities
Get your friends and family ready to be transported to the Pacific Islands for the day. Waitangi Park will be the scene for the bustling Wellington Pasifika Festival.
End Of The Rainbow By Peter Quilter, The Opera House, 17 – 19 Feb 2023
Aotearoa’s legendary diva, Ali Harper brings Judy Garland to life on Wellington’s Opera House stage.
The musical drama that entranced audiences on Broadway, the West End, and in theatres worldwide is now coming to Wellington’s Opera House in 2023.
New Zealand Fringe Festival, 17 Feb – 11 Mar 2023
Aotearoa’s leading open-access arts festival is back in Wellington in 2023 and bigger than ever
For 23 days over February and March, Wellington’s arts calendar will be packed with music, theatre, dance, stand-up, poetry, circus, cabaret, puppetry, visual art, and everything else in between.