Feature article
What agency heads are saying about spring listings coming up: Part one
What buyers and sellers can expect this spring
As we launch into the spring/summer selling season for 2022, the question on everybody’s lips is, will there be the usual surge of listings this year?
For sellers who’ve been keeping a close eye on the market, they'll be selling for genuine reasons and their expectations will be tempered to meet the market. But, looking at all the extraordinary growth that’s happened in the last couple of years, and then the fallback in 2022, those who have owned for a few years are still in a very good position to see excellent gains when they go to sell.
Let’s look at the environment sellers will be marketing their homes in. It’s one where the Reserve Bank is still raising the Official Cash Rate (OCR) to keep a lid on inflation and there will be more rises to come, but real estate commentators believe banks have factored in the most recent OCR 0.5% rise to their current rates and possibly the next anticipated one too. Since January, it’s probable your home has dropped in value by up to 20% so you have to be at peace with that.
According to CoreLogic chief economist Kelvin Davidson, house prices went up by as much as 40% over the 18 months from March 2020 to December 2021. Since last year, house prices have gone down by around 10% according to house price indices he looks at. But, in reality, that may be more like 15%. The biggest fall in prices in the Global Financial Crisis was 10% so 15% is still substantial, adds Kelvin. But that’s still a gain of 25-30% over a two year period, and there’ll be more if you’ve owned the house for a few years.
In a normal 18-month period, homes would typically appreciate by 10%, or in a year by 6%, he says. In the coming years, Kelvin expects it might be more like 3% or 4% annual growth.
The CoreLogic property economist says he’s seeing a change in mindset around interest rates, improving consumer confidence and business confidence, and unemployment remains low. In September, REINZ, meanwhile, reported a lift in requests for property appraisals over August, good news for spring listings.
As real estate agencies clear their winter stock and move into spring, it’s time to reset, says Kelvin. Buyers and home owners have adjusted to interest rate rises, there’s a change in mindset, and consumer confidence is starting to improve. The economist isn’t expecting anything crazy. “I don’t think there are any strong reasons to expect listings in spring to be anything less than normal,” he says.
With listings typically staying on the market for more days, it might appear that there are more houses for sale than usual. The number of listings on the market is at a two year peak - but it’s still not that high, there’s still a good balance out there, says Kelvin. A search on Trade Me Property shows there are currently 32,000 plus listings around the country out of Aotearoa’s 1.64 million homes.
Yes, there may be further house price falls to come in the next few months but those house price falls will get smaller, we’re past the worst,” says the chief property economist
He adds:“It’s a buyer’s market with values falling, but it’s not a full-on buyer’s market, (because many sellers don’t have to sell) so there’s a bit of balance there,” he says.
And rather than investors, sellers will more likely largely be owner occupiers who are on the move for family reasons, believes the property economist.
Trade Me Property went to the heads of nationwide agency firms and some local regional specialists to see how their listings are looking for the spring season and the answer was positive, with the caution that they didn’t expect to see an extraordinary surge of listings.
What will the selling experience be like for vendors? There are green shoots of hope, it seems just in the last couple of weeks of August there have been more homes attracting multiple-offers in the country’s biggest property market of Auckland.
How's the listings pipeline looking at Ray White and Harcourts?
Remuera Ray White agent, Steve Koerber and his wife Nila recently sold their newly completed home in the eastern suburb, after putting an unconditional offer on an iconic, listed property which came up for sale that they’d had their eye on for years.
“I took quite a risk and I was nervous about the market,” says Steve. But the couple swung into action putting their stunning Mt Hobson home up for sale on August 10 with an initial auction date of September 6.
33 Market Road, Remuera, Auckland
“Because Nila and I were running the auction, we were able to really test the temperature of the market,” explains the Ray White agent. Buyers were showing interest (they received two offers testing the market) and so they made an informed decision to move the auction forward two weeks.
Steve says he would wake up some days thinking their house would go for a lower figure and other days when he’d wake up thinking it would go for much more. “It was like a roller coaster,” he says. The price he got was right in the middle so you could say it was a Goldilocks deal.
The auction process was definitely the right way to go for their sale, says Steve. They had 10 registered bidders at the auction and three actively bidding, outspending the rest.
“The power of the auction is to get the emotions running, and we were really lucky that we had three interested parties. We built a pyramid of 10 bidders of which three were active. If you only build a pyramid of three you’ve not as much chance of getting a sale,” says Steve.
His message to potential sellers, is there are a lot of buyers waiting on the sidelines, complaining there’s nothing to buy. Don’t procrastinate, bring your property forward, he advises.
The Remuera agent says he knows a lot of wealthy people at the moment buying property, grabbing the good buying opportunities out there. And Steve and Nila are having a spring rush at the moment, so his vendors have started to respond with optimism. “I’m going from one open home last week, to six this weekend, and 12 the weekend after,” he says.
These are really good quality homes that have been held by people for 10 or 20 years who think Covid is behind them,” says Steve. A number of the vendors are downsizing and building in Queenstown, he says.
Ray White New Zealand’s Chief Operating Officer, Daniel Coulson says he’s also been seeing a change in sentiment over the last couple of weeks late August which is good news for sellers.
“One of the key drivers around demand is availability of lending and over the past six months it’s been about how high are interest rates going to go, to 8% or 9%, and that’s been paralysing for people. But that language has changed quite a lot,” he says.
The OCR 0.5% rate rise in August 2022 saw virtually no movement on mortgage rates, banks had already priced it in, which was reassuring to consumers, says Daniel.
He adds: “There’s plenty of buyers out there, and there always has been, but now buyers’ willingness to contract (a purchase) is on an upward swing,” he notes.
When looking at what's ahead, the Ray White COO says he looks at two things, new listings that have come into the market and appraisals, and, as at 5 September, the previous 28 days new listings to market were 22.56% up on the same period last year ( which was when the country was in lockdown). Appraisals are flat in comparison to last year, when November 2021 saw the peak of appraisals, says the COO.
Inventory is still strong around the country, he adds. If you look at Ray White listings on the market, the overall inventory of 4,766 properties available for sale is 90 % ahead of 12 months ago and it’s 41.8% up on the year before that.
“We’re seeing every market with more inventory, some are double, some are more than double the inventory of last year,” says Daniel.
And while Ray White is seeing fewer homes being appraised than the last two years, there’s an upside to this for serious sellers, suggests the COO. “What that tells us is there may be an opportunity prior to the spring rush. For those considering selling, if they’re on the market ahead of the rush, they will have less competition.
The quieter winter selling period has meant that the market has returned to being more seasonal, where sellers are waiting until spring and there’s less activity in winter, says Daniel.
What Ray White is seeing on both sides of the transaction is that people are genuine, stresses the COO. Vendors are selling for genuine reasons like the kids are leaving home, and they’re finding another property that suits their needs, he says.
To buyers, worried the market may continue to fall, or what may happen in the market over the next six months, if they’re planning on being in the home in five or six years’ time, it’s probably going to be inconsequential, advises Daniel.
To potential vendors this spring/summer, he suggests bringing their property on sooner and making the sales period shorter. Homes that have sold at auction over the last three months, are selling within 38 days, rather than every other method of sale which is selling at just over 52 days, he claims. If you look at the auction marketing period of 28 days, and then selling afterwards within 10 days, that’s two weeks quicker than any other method, says Daniel. The shorter period on the market, the better price you’ll get, he argues.
Meanwhile, he says: “Our message is consistent: if you’re bringing the property to the market, bring it on with structure and process assisted by time frame.”
Vendors making their decisions about selling right now, says Harcourts
At national real estate firm, Harcourts, Managing Director Bryan Thomson is seeing standard numbers in the company’s listings pipeline compared with previous years.
The volume of new listings in the last couple of months have been a bit lower than expected but people can only wait so long, they need to get on with their lives in buying and selling and now’s the time, says Bryan. “I think people are making the decision at the moment and the market will see the usual increase in available homes as we’re moving through October, November, and December. This time of year has more sales than any other time of the year, you’ll see an increase in stock and also an increase in buyers,” he says.
“My advice to anyone is, now’s the time to be active, it’s a buyers’ market, so if you’re a buyer and you don’t buy now, you’re going to have to fight with all the other buyers later, and think what you could have bought now.”
To buyers waiting for the market to bottom out, the experienced real estate MD says: “No one rings a bell when it's the end of the market (fall),” he notes.
More vendors are coming to terms with where the market is, adds the Harcourts head. “When they see a neighbour's house is selling for less, they’ll understand. I think vendors are very cognisant of what’s going on in the market,” he explains.
The tap’s been turned on, says Bayleys
National director of Bayleys Residential, Johnny Sinclair is optimistic about this year’s spring summer selling season: “We’re definitely getting an increase in activity in open homes and listings and the tap was only turned on in the last 10 days,” he says.
Over the coming weeks, we’ll see a big increase in stock, forecasts the Bayleys director.
For those who bought 12 months ago, their property may have gone down in value but for everyone else they will take the gains pre-Covid and in the past couple of years and they’ll buy and sell, he explains.
“If you look at a clock and 12 o’clock is the peak of the market and 6 pm is the bottom, we’re at 6pm and for those who want to get on with their lives, they’ll do well to buy and sell in the same market,” says Johnny.
Geographically, each market will vary, notes the Bayleys director. Christchurch and Queenstown were still firing as of a couple of weeks ago, while the Wellington market remains quiet. Johnny compared the number of properties that sold between January to end of July in 2008 around the Global Financial Crisis which totalled 15,400. By comparison the number of properties which sold in January 2022 to the end of July 2022 was 15,900.
“When you think of how many houses have been built since 2008, this is as low as it’s going to get,” says the Bayleys director.
At UP Real Estate, the Auckland independent brokerage, there’s a shift in the atmosphere in the current market with indications that inflation could be under control, and that therefore interest rates are likely to be topping out, says UP Real Estate director Barry Thom.
“We’re noticing buyers are back, we’re receiving more offers, and yesterday, we saw multiple bids at a competitive auction. At first it might be a trickle, then a flood, we’re hoping that might be the case,” he says.
When it comes to spring listings, it’s going to take a bit of time for media and vendors to understand that they need not fear the market, says the UP director. He’s expecting some of the spring listing vendors may include people who had a crack at selling in winter, and decided to bring their home back in spring. The garden looks good, the pool sparkles, the grass is green, he says.
“We’re expecting a whole lot of vendors who couldn’t get what they wanted to get and withdrew and they’ll come back with a more realistic approach,” predicts Barry.
To potential sellers, he would say, there are plenty of people in the market, standing by, ready to make an offer on a good home.
“It’s already happening,” he adds. In the last two weeks it’s been quite different. At a recent auction there were four or five buyers and the seller achieved well beyond the reserve,” he says.
One popular property had six buyers competing to buy it and one who missed out because their offer was too low, commented to the UP director: “I feel I’ve been duped by the headlines. We could afford it, and we didn’t offer as much as we should have.”
This is a transitional marketplace, says Barry. “All it takes is for a buyer to miss out on a couple of properties because of an unrealistic offer to realise, this isn’t what I’ve been told. On the other side, it’s for the vendors to notice that there are houses selling for a little bit less than they’ve aspired to and they’ll meet the market.“
“At some point the sun will come out, buyers will realise the world is not going to end and vendors have got to get on with their lives, and there’ll be a tipping point,” he adds.
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