Across New Zealand house price inflation appears to have slowed, as tighter lending conditions, loan-to-value restrictions, and the run up to elections continue to deter buyers. But economists predict a rebound post-election, and home owners are being told not to panic. If you are considering selling your property over the next few months, take a look at some of our helpful tips.
A cooling property market
House sales nationally dropped significantly in July 2017, with figures from the Real Estate Institute of New Zealand (REINZ) showing a drop of 24.5 per cent, the lowest fall in property sales in a non-Christmas month since August 2014.
Bindi Norwell, REINZ Chief Executive, said tougher lending rules were to blame for much of the fall, and that the Loan to Value Ratio (LVR) restrictions had slowed the market but were also creating an intimidating barrier to entry, especially for first home buyers.
“The LVR restrictions have done their job of slowing the market, but now it seems they are acting as a handbrake which is why REINZ is calling for LVRs to be reviewed for first time buyers,” said Ms Norwell.
Harcourts Hamilton general manager Brian King agrees that LVRs need to be reviewed. “They took a while to put them on and if they take a while to take them off it’s going to work against the market. If they don’t move fairly soon we might see a negative type of market,” King said.
Given the continued growth in population and the relative shortage in housing supply, it’s unlikely the Reserve Bank will make any changes to LVR at this stage.
No need to panic
Property Institute Chief Executive, Ashley Church, has assured home owners that the slowdown is mostly predictable, and that those buying and selling in the same market would be less affected by house price movements.
“House prices aren’t going to collapse. While there may be small pockets of the country where prices drop a bit more dramatically, history shows that Kiwi house prices tend to settle, rather than drop, at the end of each boom.
“You need to go back to the mid-70s to find the last serious collapse in Kiwi house prices – and that was driven by a series of factors that simply aren’t present in the current housing market,” said Church.
Sellers need to work harder
As the market slows, vendors with a property to sell are having to work harder to find a buyer. But it’s not all doom and gloom! There are some ways that you can ensure your property stands out in a slowing market:
- A strong marketing campaign aimed at your targeted buyers.
- Price it right – it’s vital vendors meet the market and are realistic in their expectations around a sales price.
- Partner with a good real estate agent who understands the market, banking regulations and lending criteria.
- Choose the best method of sale – be it by auction, tender, price by negotiation, or with a listed price.
- Aim to impress by giving your home a makeover – consider curb appeal, decluttering, home staging, or a soft refurbish to create the right first impression.
- Make it easy for buyers by ordering a LIM report to save buyers doing it or getting a rental appraisal to appeal to investors.
Refinancing or refixing
If you are looking to tap into your home’s equity and use this time to renovate or you’d like some advice around interest rates, get in touch with a Mortgage Express adviser.