Market Update - August
The latest stats from the REINZ are out, and July saw things starting to heat up in the market once more. First home buyers and owner occupiers are the most active buyer pools in the local market at the moment, which isn’t a surprise. Many investors are choosing to wait to see what happens in the election before making any decisions, and we expect if there is a change in government, that we will likely see them back in force.
Due to this backlog of investors, if there is a favourable change in government, we expect to see a lot more competition in the property market, which is likely to drive prices upwards. However, now that National have just announced that they will reduce the Brightline test to 2 years, bring back interest deductibility, and allow overseas investors back into the market for purchases $2million+, there may well be more investors entering the market quickly prior to the election to buy in a market with less competition and therefore lower price. Astute purchasers will also factor in that at some point next year the rates will drop and people's affordability will increase. That combined with the back log of purchases, not only investors but also people moving up the ladder, points towards things changing extremely quickly in the market place.
Interest rates are still high, however we expect that they are now peaked to peaking, due to a number of factors. The RBNZ announced that we may have another OCR hike later in the year which may have a small effect on interest rates, however we can’t foresee any large jumps like what we have been seeing over the past year and a half. The long term fixed rates are still lower, so this indicates that the banks are expecting the rates to begin falling sometime later in 2023/early 2024.
In the Queenstown-Lakes region, the average price for July is sitting at $1,400,000 which is up 6.2% on June and up 16.5% on this time last year. Again, Queenstown bucks the trend of declining/stable house prices that we are seeing across New Zealand, and is one of the few regions to have experienced continued growth in a slower national market.
There are few properties on the market at the moment, with only 56 being sold in the Queenstown-Lakes region during July. This is down significantly on last year, however local agents report a lot of activity at open homes, with demand outweighing the amount of housing stock available.
For the rest of Central Otago, the median house price for July sits at $890,000. It’s important to remember that the Central Otago District includes Wanaka and the whole of Central Otago. These regional figures can often be skewed due to the higher nature of Wanaka house prices and lower nature of house prices in some of the smaller towns in the region.
This figure is a new record for the region, with a 12.7% increase on June and a 25.45% increase on this time last year.
In terms of days to sell, properties across both regions are definitely taking their sweet time to sell right at the moment, with the days to sell count in Otago the highest since 2009. Right now, properties are taking an average of 45 days to sell. This is due to the minimal pressure on buyers to complete deals right now. We are seeing less “property chains” (where people are relying on their own sales to settle), and the competition for homes remaining lower.
Taking into account all of the above, now is a great time for those looking to buy their first home or move homes as there is less competition. With interest rates flattening out, if you can afford to do so, now is the time to make moves and come and talk to us about what you need to do to make your dream home happen.