Prices are spikey, sales numbers are good, market messaging is mixed but one thing is clear ‘buyers have lost their fear of missing out.’ Therefore, although there is generally a good level of buyer activity and resulting contracts to buy, activity is not uniform. Buyers are choosing, and have been for some months, to inspect and walk away from homes. Homes: that are less favourably located; that have too little or too much yard space; that have a tired décor, or simply are not attractively presented; that are on busy streets; that have shared driveways; that don’t have private outdoor living. The fine points on the list of features, which were in pencil, are beginning to get inked in.
Buyers, just like vendors, want the real estate licensee they are dealing with to give them a clear idea of the price at which a home will sell. It is always a tough question and as realtors we are required to provide the vendor with a considered assessment. But it has got tougher. The market price trend line is now neutral. Flat, but not flat calm, rather like the surface of a lake alternatively moved by a breeze and hit by a gale. Sale prices are simply spikey and Capital Values are as always a poor guide.
Nonetheless sales numbers are good, in Pukekohe residential. Indeed the office I’m associated with was writing an average of 1.7 residential contracts per day as at 20 February. In the boom period this office was typically writing in excess of 2 residential contracts per day. There is no evidence that the Office has increased market share so Pukekohe residential remains a brisk market. It is however a market in which buyers cherry pick. Good homes that don’t look to be a close fit for the buyer’s requirements get passed by. In a boom market buyers are more ready to compromise. This is a tougher market in which to sell.
Investors are still active but there are fewer than in the boom period and those actively looking are pursuing the quality end of the market. After March 31 there may be even fewer investors actively looking as the bright line test, the capital gain ownership threshold, shifts from 2 years to 5 years.
First home buyers have got more selective and the homes they would like to own are perhaps 15% more than budget. $650,000 lending limits don’t cover $700,000 purchases and like other buyers first home buyers have got more selective. And it is first home buyer purchases that are needed to enable those wanting and needing to upscale to their second home to make that move, to restore and build market momentum.
It is only the large imbalance between demand and supply that is keeping prices spikey and plateauing. Median days on market is increasing. It is days on market that generate pressure: on the family relocating for work reasons; on the spec builder; the subdivision developer; and the landlord who is tired of dealing with tenancy related problems and having looked at emerging Government Tenancy Policies feels the time to move on is now.
While not fragile, the market is in a season of change.
