Signals the NZ Property Market BOOM is Over
The Canary in the coal mine – Signals the Property Boom Is Nearly Over
When a market shifts, people are often left wondering ‘how have things changed so much and so quickly?’ Like a canary in a coal mine, there are always indicators, often undetectable, to those outside of the industry which signal change is on the horizon. While nothing is a certainty, here are some of the ‘property canaries’ to be aware of.
Lifestyle (sentence) – Making a Lifestyle Change
When times are good, and prices are on the rise, overworked townies look to greener pastures in the form of lifestyle blocks. Dreams of a slower pace of life, tending land alongside the ability to justify the purchase of a new Ute become a possibility. When confidence in job and housing markets decrease, people sit tight. They are now unable to rely on unused capital and are concerned about longer-term employment. A keen observer of the property market will note: those once oh-so-desirable lifestyle blocks taking longer to sell, and sometimes don’t sell at all. Until the next property cycle that is.
Developments – Buying a House Off Plans
‘Sold out in a week’. ‘Only three left’. ‘Secure now and bank the gains’. No doubt you will have seen all of these in the last three years. When a market is hot, it is not unusual for an entire development to sell out in the space of a cocktail party, long before the first peg is even in the ground. In a hot market, developments ramp up, demand for labour is high and the costs of construction escalate, and so too do the costs of buying off the plans. That’s ok when times are good. But when a market stalls and limited growth is in sight, developments are no longer considered a good speculative option. Look out for the ‘buy one and we’ll throw in the furniture for free’ deals. Those are big yellow ‘signing property’ canaries!
Aggressive lending – Getting a Mortgage in a Downturn
No matter how banks like to portray themselves, scratch the feel-good surface of that family-focused advertising and it’s all about money. When times are good, the lending takes care of itself. When uncertainty hits and the borrowers retreat, money starts building up and the bank’s lending strategy takes a more aggressive path. The ‘bank’ canary to be aware of comes in a format similar to this; “Sir, are you aware your pre-approval has expired? We can re-issue this with some extra extended lending and lower rates if you would like? It will only take a minute!”
Real Estate Advertising
‘Family paradise’, ‘Bank the capital gains’, ‘Limited opportunities’ are replaced with ‘Vendor must sell’, ‘Urgent action required’ and ‘Their loss, your gain’. As desperation starts creeping into the market, property ad headings and scripts become very obvious indicators of change. But by the time they do, it is likely the media will have started noticing too.
The Wellington Real Estate Market
February saw the biggest increase in listings that we have seen in a couple of years. And as the stock levels increased, the clearance rates dropped, with buyers anticipating more stock yet to come. Then just as quickly as the market took off, it landed again, with listings numbers dropping off at the tail end of the month.
With the population of the capital still rising, we anticipate that historically low listing levels will hold values up and may see some further upward growth, although steadier than we have seen over the past two years.
Wellington Market Quick Facts
Average sale price by Ward:
March Fun Facts
For three weeks during March, Wellington is hosting the popular NZ Fringe Festival event. Here are a few facts about the event.
Did you know?
- The NZ Fringe Festival has been going for 28 years!
- It features the contemporary work of all art forms including audio (podcast), busking, cabaret, comedy, circus, dance, improvisation, music, online, physical theatre, poetry, puppetry, spoken word/storytelling, theatre, visual & digital art.
- Artists/performers come from around the world to participate
- It has attracted over 130 shows this year
View the program and buy tickets here.
THANKS FOR READING
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.