Home owners, agents hike listing prices back to peak levels due to 'turning market'

Media speculation about the housing market ‘turning the corner’, and lower interest rates, contributed to a rise in the median asking price for listed homes in March back to the peak levels last seen in October 2007, property listing site Realestate.co.nz said in its NZ Property Report released on Wednesday.

Vendors may be setting unattainable price expectations following speculation about a turning market, Realestate.co.nz CEO Alistair Helm said. Helm also noted that competition for listings between agents led them to accept vendors’ high listing prices because they knew they could negotiate down to the buyer’s expectations.

The national median asking price for listed homes in New Zealand rose to NZ$399,000 in March, matching its pre-recession peak in October 2007, Realestate.co.nz data showed. March was the second consecutive month in which price expectations rose. March expectations were up 5% from February and up 1% from March a year ago.

“The current state of flux in the property market may be setting unattainable price expectations in the minds of vendors as to the worth of their properties,” Helm said.

“Contributing factors include recent media speculation that the market may be turning the corner, along with the lower interest rates that have been available through much of the first quarter,” He said.

“An interpretation for this rise in asking price is to understand the motivations of sellers and real estate agents. The sellers see media coverage presenting a degree of market resurgence, albeit with falling prices.”

“With limited numbers of new listings, agents are eagerly courting sellers to win listings. With sellers eager not to capitulate on price, they set a higher asking price in the knowledge that they can negotiate down to the buyer’s expectations. Agents counter this by informing sellers that property only sells when priced to current market price but fail to convince sellers when threatened with potentially losing the listing.”

“The outcome is a divergence between selling price and asking price. It is hoped that the presentation of these facts, in this report for the first time, will bring attention to sellers’ expectations enabling greater visibility and transparency in the market.”

This article has kindly been republished courtesy of interest.co.nz. 

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Posted: 1 Apr 2009

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