Pukekohe Median Prices up 10.77%. So What?

Pukekohe Median Prices up 10.77%. So What?

This was front page news in the NZ Herald Business Section on 17 March. The new median price for Pukekohe property was $720,000 during July – December 2017, a rise of 10.77% relative to the same period in 2016. Information that could seem encouraging to home owners, and probably disheartening for first home buyers.

Now the median price is simply the middle price of a number of sales. The average price, if disclosed, would show whether the value of sales was pushed notably below or above the median price.

The NZ Herald report was drawn from a routine Barfoot and Thompson market update. That market snapshot did not provide depth to the commentary, and neither it should have, that is not the purpose of these snapshots. The NZ Herald Report is nonetheless significant:

1. The statistics were drawn for a period which spanned much of the winter, the national election, post-election uncertainty, and the lead into the seasonal property market lull of mid-December through January.

2. This was the period when LVR restrictions, which started in 2004 and got progressively tougher, were at their most restrictive.

3. First home buyers were then at their most disadvantaged.

4. Residential property investors faced the greatest restrictions and had the lowest capacity to spend.

5. Pukekohe new builds are here in numbers and for the most part these are all priced in excess of $700,000.

Under these circumstances it is no real surprise to see a rise in median prices. First home buyers, typically buying less expensive homes, and residential property investors were the most restricted in terms of the attainable purchase price. The fact that fewer lower priced homes were therefore able to be purchased inevitably meant fewer low priced homes were sold. And just as inevitably the median price increased.

Unfortunately or fortunately depending on whether you are a home seller or a home buyer a 10.77% increase in median price does not translate into an across the board 10.77% rise in Pukekohe home prices. That would be a little like thinking Council issued Capital Values, values derived almost entirely by desk work, are useful indicators of fair market value.

Factually, we realtors saw evidence of price increases in the first six months of 2017 across all price segments but by winter the market was stagnant.

Our work would be a lot easier and our businesses less risky if it were professionally possible to do a blanket percentage adjustment to price. Then the vital role that Registered Valuers and realtors have might well be redundant. But, nope, we have to look at homes one by one, find comparable recent sales, something that presumes some actual familiarity with the chosen properties, and then be able to explain to owners how the dissimilarities and similarities affect the market value assessment of the home we are appraising.

Take care out there buyers and sellers. Assess carefully. Choose wisely.