It’s been a month of troubling headlines about the housing market, from CoreLogic reporting the largest quarterly house price fall since the Global Financial Crisis to the number of new mortgages hitting rock bottom to forecasts of more price falls.
But Tommy’s Sales Director Nicki Cruickshank reckons the end of the slump is in sight.
“There’s always a lot of headlines around house prices because they interest so many people who own homes,” she says.
“The Wellington market had a very sharp rise in prices in the last couple of years, so we are now having a correction – which is not unexpected, and probably a good thing.
“Recent price rises were unsustainable, so when you have a sharp rise, you would then expect a rapid fall. I would describe the Wellington market as ‘almost corrected’!” She says interest rates are starting to settle, and even contracted slightly with some banks, while open home attendances are increasing — despite an exceptionally wet winter,
“A much needed increase in first-home buyers, as house prices fall, has made it possible for some to return to the market, and although the investor market has been very, very quiet, as we near the bottom of a cycle we will see smart investors return.”
Nicki says the downturn has encouraged a few opportunistic buyers to make “cheeky offers” that have backfired. “We have seen a small number of buyers in the early stages of the prices falling try it on with ‘cheeky’ offers. “But, unfortunately, all that does is annoy the vendors and so when the buyer then tries to come back with a more sensible offer, the vendor does not want to deal with them.
“On a million-dollar house, for example, offering $300,000-$400,000 under what an owner may be looking for, when the market has come back somewhere between 10-15 per cent, no owner is going to take 30-40 per cent less.
“Most houses are advertised with a buyer guide, indicating the bottom of what an owner may take, but with any good house, there may be multiple offers on a property, which will see the sale price end up above this.”
Nicki cautions against using rateable values and digital algorithm websites as the basis for making an offer. “Rateable or government values have become irrelevant again – a lot are set well above the market value of a property, some about right and some too low. “Digital algorithm websites are also out of step with the market. So neither is a good guide.
“The best advice you can get is to ask the real estate agent where a house sits in the current market – they have been through it, researched it and should know where its value lies.”
Nicki expects the traditional spring rush of listings over the next few months. “People still have to upsize and downsize, and if they are buying and selling in the same market, then prices are less important,” she says.
“Houses are taking longer to sell, so there is likely to be more on the market than last year, and those owners who tried to sell last summer — but weren’t prepared to meet the market — have had time to adjust and may return to sell.
“So I think there will be more buyers around and I would expect it to be more of a flat market.”
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