Market subdued, but lift expected says Harcourts

Harcourts New Zealand CEO Hayden Duncan says there is traditionally a lift in the market in Spring and while there were indications a rebound would occur this year, so far that has not eventuated.

"As noted in the last Harcourts Property Focus newsletter it looked like the market was thawing, with an increase in properties being listed for sale and growth in the level of buyer enquiry. However, as our written sales figures and the industry-wide settled sales figures released by the Real Estate Institute of New Zealand show, it did not lead to a rise in sales to the expected levels.

"Around the country our volume of written sales in October was well down on the same month last year while REINZ reported the lowest number of October sales since records started in 1992."

Mr Duncan says according to Harcourts’ data values have continued to strengthen on the whole however, while the figures released by REINZ showed the national median was holding firm at $350,000.

"The earthquake-affected Christchurch market is an exception, but it has out-performed the early predications and is expected to continue to pick up."

Mr Duncan says while September and October have been disappointing, a lift in activity is expected to be evident in the November and December statistics.

"These months are both typically quite busy in the real estate market as people look to move in time to maximise their enjoyment of the summer months in their new homes.

"We definitely believe there is some pent-up demand and we certainly expect a lift in sales during the warmer months. Certainly our early November figures along with anecdotal feedback from around the Harcourts group suggest activity has increased."

With income tax cuts having now come into effect and interest rates remaining low affordability has improved, Mr Duncan says, and with relatively good levels of stock available too he advises buyers to seize the day.

As for advice to those considering selling: "Good luck sometimes happens but it will never be as successful as a sound marketing campaign and a professional, competent salesperson with strong company support," he says.

New Zealand dwellings median prices

Lenders easing their stance

Some recent softening on home loan criteria is good news for buyers.

In addition to low interest rates there is some additional good news for home buyers says Mortgage Express CEO Andrew L’Almont.

"Encouragingly, particularly for first-home buyers, lenders are staring to soften their stance on the criteria needed to get a home loan," he says.

"In fact two of the major banks and a second-tier lender have recently announced they are now prepared to lend up to 95% loan-to-value ratio to first-home buyers and others with good, stable employment and unimpaired credit history.

"This is an opportunity that has not been available for the last two years," he says.

Home loan affordability criteria has also been softened according to Mr L’Almont, with house prices being either stable or marginally cheaper than previously and interest rates looking likely to remain low for a while yet (based on the Reserve Bank’s Official Cash Rate forecasts).

This suits a marketplace that has seen a considerable shift from homeowners fixing their rates to staying flexible on a floating rate, Mr L’Almont says.

"People are getting more educated about what's available to them and not just fixing because the bank said so," he says, "as evidenced by Reserve Bank data which shows the value of mortgages on floating rates looks set to reach its highest level since the bank’s records began.

"Despite the availability of attractive two-year fixed rates in September there was $67 billion of mortgage debt on floating rates, compared to $37 billion a year ago - an 81% increase on 12 months ago and a 220% jump since September 2008!"

Mr L’Almont says he thinks there has never been a better time to buy property. "With more money in everyone’s pocket courtesy of the tax cuts in October, easing lending criteria and what many are saying is a ‘buyer’s market’ the option of buying real estate as a good long-term investment is looking like an excellent choice right now."

Moving behaviour

When Kiwis move the majority review their service providers and most make significant purchases at the same time a recent survey has found.

According to the QV.co.nz survey, when people move house around three quarters review at least one of their service providers, such as their electricity, insurance or phone/internet supplier.

As a result many make a change - 30% of respondents switched power company, approximately a quarter changed telecommunication and insurance provider and 19% moved to a new loan provider.

The survey also found that there were many other expenses incurred apart from those actually associated with the move. Over half spent up to $7000 on home furnishings, the same on whiteware and the same on painting and decorating. Half spent up to $2500 on gardening and landscaping and just over one third did kitchen renovations.

Some 28% of people who moved then spent money on a car too.

Did you know?

More people sell their existing home before buying another rather than vice versa according to a survey by QV.co.nz.
Home loan affordability improved sharply in October to mid-2004 levels according to the latest Roost Home Loan Affordability report, largely due to income tax cuts.
The national median number of days it took to sell a house in New Zealand in October was 41, with a range from 34 in Southland to 64 in Central Otago Lakes.
In October the truncated median asking price on realestate.co.nz was $420,451.
As of September 40.3% or $66.9 billion worth of New Zealand mortgages were floating according to the Reserve Bank, the highest percentage since October 2002.
You can find out about property tax rules and where mistakes are commonly made in Inland Revenue's "Tax and your property transactions" guide (IR361) on www.ird.govt.nz
Some 88% of respondents in the latest ANZ Property Investment Survey said they plan to hold onto their rental properties.
Harcourts has a new free tool for buyers - Harcourts Mobile Agent for iPhones and iPads allows anyone with an iPhone or iPad to search for Harcourts' listings or sales consultants throughout New Zealand or Australia.

This article has kindly been published courtesy of Harcourts. Visit www.harcourts.co.nz for more Information.

Posted: 25 Nov 2010