One of the upsides of testing positive for Covid is that it gave me a head start on this month’s Barometer, which consequently keeps the boss off my back. As Omicron spreads itself across the country, I ponder how the New Zealand property market has mirrored this Covid outbreak.
When Auckland sneezes, New Zealand catches a cold (or maybe it’s Covid!)
Toward the end of 2021 real estate agents started to get a sense that the market was coming off its extreme peak of the two years prior. It started with a few properties being passed in at auction, and then a rapid escalation of stock numbers. Just last week the media was reporting that one Auckland Central agency cleared just 2/19 properties under the hammer. Wellington and Hamilton have subsequently also become the victims of waning buyer sentiment with ‘falling market’ rhetoric now widely reported. Although Christchurch, a long-undervalued market, has begun to slow it has not yet seen a drop. The regions are also trucking along relatively well. It is not abnormal to see a lag between the main centres and the regions, this tends to happen on the way up, and the way down.
Move back to the city
On the back of sky-high city prices and the ability to work from home, country towns have seen an explosion of activity as people move out of the city in their droves. As the main centres start to stagnate, town/lifestyle buyers dry up with people reluctant to risk it all on ‘living the dream’. When big city spenders leave the market, local buyers are reluctant to pay the over inflated prices of a boom which leaves a clear gap between expectations and the market. It can be hard for some current sellers, who reflect with jealously on the neighbours who cashed in when the timing was right, to accept that the peak of the market was last year. With the gap between vendor and buyers ever widening, this can see the market in a stalemate.
Working from home
Over the past two years, ‘working from home’ has been thrust upon businesses whether they like it or not. Now, on the back of a tight labour market the employee is king, and they can pick working conditions, locations and possibly even hours. Flexibility is what’s in demand and this often means more time away from the office. With any luck we are moving through the last of the pandemic, and dare I jinx it, to a way of living with Covid restrictions in our wake. That means people can start connecting again both socially and in the workplace. There appears to be a distinct drive to return to the office from business owners, with team morale lifting as a result. I can say for certain I am delighted to have our team back together. This may well be a step change from some of the real estate decisions of late, as in Covid times, proximity to the workplace did not hold the same importance as it once did. A reversal of this trend may see a move back towards properties centrally located homes.
Exceptions to the rule
Areas less likely to be affected by the current market forces are those that offer an alternative style of living. Nelson, Mt Manganui and Central Otago (namely Queenstown and Wanaka) have certainly been the destination of choice for retirees and well-off lifestyle buyers. With the boarders opening, it’s these locations that can buck the downwards trend.
The Wellington Market
The Wellington market is knocking on 1000 listings. A phenomenon we haven’t seen since pre-2015! Since then, we saw a gradual decline in stock levels with post Covid levels topping out at around 400 homes and apartments for sale at any one time. So, what do these numbers really say? Simply put, more listings are coming on than selling.
As we transition to more of a traditional market, the gap between nice, well-maintained properties and those requiring work grows. I’ve written about the lack of maintenance in the Wellington property market for years. While the market is booming, vendors can hide a wide range of sins, now it is a different story. Buyers are putting a heavy discount on poorly maintained properties, that is if they are attracting attention at all. Another sector to watch is the development market. Buyers in their hundreds secured property or plans for the purpose of speculation in a rising market with cheap money, these are likely to start flooding the market as they near completion.
Selling in this market requires experience, knowledge, and skill. It also requires proactivity, a characteristic many an agent would never have had to demonstrate. Hope is not a plan. If you would like to talk regarding selling in the current market, we are always happy to chat.
Wellington market quick stats
What’s on this April in Wellington?
Friends! The Musical Parody, Michael Fowler Centre
Friends! The Musical Parody takes a hilarious look and remembers the TV phenomenon that ruled the 90s and became a cultural institution with millions of fans across the globe.
Like the original television series, The Musical Parody follows the lives of six wacky 20-somethings and goes back in time to celebrate and poke fun at some of their most iconic moments as they navigate the pitfalls of work, life, and love in 1990’s Manhattan.
The Musical Parody is a hilarious good-hearted romp through our favourite moments from the hit TV show in an uncensored, hilarious, fast-paced, music-filled production
Rita Angus: New Zealand Modernist, Museum of New Zealand Te Papa Tongarewa
Over the course of her life, Rita Angus produced a remarkable body of drawings, watercolours, and paintings. In Te Papa’s summer exhibition Rita Angus: New Zealand Modernist | He Ringatoi Hou o Aotearoa more than 70 works by this iconic New Zealand artist are on display.
Hurricanes Rugby At Sky Stadium
The brand-new Super Rugby Pacific season is here and our Hurricanes are on the hunt for glory. Sky Stadium is hosting all Hurricanes home matches for 2022.