One of many tactical mistakes made in WW1 was the lack of decentralised command. Simply put, lower ranked officers and soldiers on the ground were not permitted to make decisions in response to changing situations. This lack of real time data causes the same problems in the real estate market. The market has changed so rapidly and by the time the media releases sale data and trends it is too old to make decisions. So, for those of you looking for the bottom of the market, our bet is you have already missed it. Here’s some of the reasons why.
The second of the deadliest sins. As the rhetoric has changed so have the buyers. Buoyed by the market falling, buyers have started to enter the market again thinking that they might nab a bargain. The problem for buyers is that they are not alone in their thinking. We have started to have a lift in enquiry, and open home numbers, which in turn creates competition. Apart from the turbulent Covid years, this winter’s buyer numbers have been better than usual. While this increase in buyer activity is unlikely to push the market back up, it will more than likely underpin our current levels.
Tap Turned Off
Kiwis hate having to take a loss on real estate, even if that loss is only perceived. They would rather wait out the bad times and sell when the market returns to a level they are happy to accept. While the logical mind would point out the opportunity cost of holding property, humans are anything but logical when emotions, and money, are involved.
Earlier in the year stock levels were climbing on a weekly basis, but since late May have retreated quite rapidly. Yes, this follow’s annual seasonal trends but also its also reflects the fact that vendors who don’t need to sell (their words) won’t come even try. Unlike the pending over supply of gib, you watch, properties for sale are not rolled off the production line. Low levels of stock will also underpin current market prices, an indication the Wellington market at least, is heading to a holding pattern.
Over Cooked It
The Reserve Bank were slow to address the rapid rise in inflation and have only just recently admitted that they got it wrong. ‘Admitted’ with some great spin that is. While they have indicated the OCR is heading towards 4% we are unlikely to actually get there as the wider economy has reacted to both inflation and the additional cost in borrowing. And if big banks are moving some of their fixed rates down and competing for lending with cash back, it is likely they are feeling the same way. Former Prime Mister and chancellor Gordon Brown once said the key to the economy was to keep a light hand on the tiller. This statement would be a good guide for the RBNZ.
Return To Safety
During the ‘Covid era’ regional house prices have skyrocketed as people brought holidays homes or moved from the city for a slower pace of life. The under lying issue with regional property growth is the economy of these regions doesn’t support high property values leading to significant and prolonged downturns. Over the past two decades, the residential markets which have performed consistently have been Auckland & Wellington. While the Wellington market has had a shift downwards, in time they will both be the focus of those buyers looking to secure safe real estate investments.
The Wellington Market
Over the last eight weeks we have noticed a return of buyers, especially at the first home level. This has brought a bit more competition which appears to stalled the slide of property prices. The return of first home buyers allows for the natural flow of people looking to up-size which in turns helps those looking to downsize. If Wellington follows its historical patterns, we are likely to hold this current position for a few years. Good quality, well-presented homes will sell. Poorly maintained and compromised homes may struggle. And capital gains will only really be made through capital improvement, not land value.
Wellington Market Quick Stats
What’s on this August in Wellington?
Visa Wellington On A Plate, Various Locations, 1 – 31 Aug
August is Wellington’s biggest foodie month of the year, as the country’s best chefs, producers, bartenders, growers, and hospitality stars descend on the culinary capital for Visa Wellington On a Plate.
Whether you’re into juicy burgers, one-of-a-kind events, fun pop-ups, crazy cocktails, or curated menus, you’re sure to be served a generous helping all month long.
Les Misérables In Wellington, St James Theatre, 19 Aug – 04 Sep
The iconic theatre production Les Misérables is returning to Wellington, after last appearing in the city two decades ago. The show that has been sought out by millions around the world will be staged at the newly restored St James Theatre in August and September 2022.
The Truth Is Out There, The Dowse Art Museum, 12 Mar – 14 Aug
Are you looking for extraterrestrial life? Or failing that, artistic interpretation of their existence?
The Dowse Art Museum has collected the work of nine New Zealand and international artists who have looked up to the skies and wondered about the raft of UFO sightings, alien abduction stories, conspiracy theories, and other unexplained phenomena.