Sales are slower to complete, property is staying on the market longer, and upward pressure on prices is easing, according to the latest data and insights from the Real Estate Institute of New Zealand (REINZ). It’s tough reading, whichever side of the sales equation you sit.
“Access to finance, interest rates, and inflation are primary concerns for buyers,” says REINZ CEO Jen Baird. “December changes to the CCCFA had a major effect on people’s perception of their ability to enter the market. Now, as the pace of the market and price growth continue slow, there is a fear of overpaying, and buyers are stepping back to see what happens in the market over the coming months.
“The drop in sales count is partly due to the reduction in competition — the result of increased stock levels, growing listings and fewer buyers, particularly first-home buyers and investors. The Government's May Budget announcement was welcome news for first home buyers, bringing increases to the cap on the price of property eligible for a First Home Grant to align with lower quartile estimated values for new and existing properties and the removal of caps for First Home Loans.
Fortunately, Baird thinks most vendors understand the market and are adjusting their price expectations accordingly. Agents say the feedback from buyers and moving into winter has helped with this. Agents also report that media stories predicting prices will continue to decrease are encouraging buyers to wait.
Selling by auction remains a popular method of sale, particularly within the suburbs where Damerell Group works. However, our latest stats report fewer properties were sold by auction compared to May 2021. With an increase in buyers who cannot buy unconditional — who require finance and other conditions — some sellers are reluctant to go to auction. However, the value of auctions over private treaty sales is that, on average, properties transact far, far quicker by auction. This is an important factor for many buyers and selers, who find themselves in transaction ‘chains’.
You can see from the graphic below the comparable clearance rate success of the two different methods of sale. As a vendor you are twice as likely to sell your home within 90 days if you market it as an auction in the first 23 day period.
“The supply-demand balance has shifted, and the market has hit a slower pace,” says Baird. “In a more moderate market, there is usually a move away from auctions and an increase in properties listed with prices; and while on-the-day auction clearance rates have fallen, we continue to see serious buyers attend [auctions]. Auctions are a transparent way to evaluate the market value of a property, and while a home may not sell on the day, they generate interest and open the sale up for conditional buyers.”
Baird’s last statement is borne out by agents reporting an increase in the number of sales made in the few days after an auction to a conditional buyer – which is another positive reason to go to auction with your property.
Damerell Group, with its team of highly experienced agents and marketing professionals, is in an ideal position to help vendors navigate the current market. Our success rate at auctions continues to return 'best in class’ figures for the entire Auckland region, and we are committed to delivering a market-leading service for all our clients, vendors and buyers alike.
Market update from Damerell Group
As this month's article highlights, a slowing market driven by a number of factors has resulted in few active buyers and more competition with other listings on the market. This means that more than ever, sellers must clearly communicate to the market that they are motivated sellers. It’s not uncommon in this market to hear people say “it’s a buyer market”. This really just means that buyers typically have more choice and more time to make decisions, with more properties taking longer to sell.
For buyers to engage with your listed property, they must believe that you as the seller are ready to meet the market, with an adjusted view of market conditions and market value. Conveying strong selling motivation is therefore key. We know that changing market conditions do not prevent life events from happening. Homeowners relocate for new job opportunities, for better schools, they upsize when families grow and downsize when kids head off to uni. Sellers who can clearly and succinctly convey to the market that they require a sale (and aren’t just testing the markets’ waters) will likely fare much better when it comes to buyers attending the open home and registering to bid. Before coming to market, your Damerell Group salesperson will have a discussion with you about why you are selling and the best way to communicate this to the market.
All the best to our buyers and sellers for the coming month.
Joe Hurn AREINZ
Damerell Group Sales Director