A post-election wave of listings means selling sooner may be better
Advantages to selling in September/October. Agency heads have some convincing arguments to help with these conversations
A percentage of homeowners preparing to sell may well be telling you they want to hold off on until after the national election in mid October. But there’s real value in hitting the market ahead of that timing.
It’s easy to see why property investors want to wait until the election result is known - a National-led government would reinstall tax deductibility on rental homes in a phased basis from April 2024, (something which Labour cut from 2021), and would reduce the bright-line test from 10 years to two years, (Labour extending the test from five years to 10 years in 2021).
But for owner occupiers looking to trade up or down or just generally move on with their lives, agency leaders are scratching their heads about why the October 14 election should affect homeowners’ selling intentions, especially when there’s strong buyer demand right now and a dearth of stock.
Our State of the Nation Property Report shows that 16% of homeowners are waiting until after the election to sell and 17% of property seekers are waiting to buy. But at the same time, 53% of house seekers think that now is a good time to buy.
While October is generally the busiest month for buyer activity, with the election happening in October this year, Trade Me Property predicts November to be the most active month in 2023.
Some agents are predicting a tsunami of listings in November and December if vendors hold off, so why waste the opportunity of perfect selling conditions in September and October, they ask.
There are obvious advantages to selling in September and October, and agency heads have a few convincing arguments to help you with these conversations.
What agents can say to sellers dragging their feet
Ray White NZ CEO, Daniel Coulson, says it’s important to understand why someone is bringing their home to the market, what they’re wanting to achieve.
“If you’ve got a seller who is waiting for the best opportunity to sell a property…what we can advise is that, at any time in the last two years, dating back from October/ November 2021, the conditions are better today than at any point in that time,” he says.
Some vendors may wait for a change in policy before they decide to list.But that’s not going to happen on October 15, the day after the election, explains Daniel. So, again, it’s for the vendor to decide how long they’re willing to wait. Until January? Until February or March next year?
The Ray White CEO says if the Reserve Bank raises the interest rates again in response to the positivity of sentiment in the economy post-election, then buyers will be able to borrow less money.
“We’re saying conditions are very good at the moment, there are more buyers and less competition, and there’s greater competition to come post-election,” says Daniel.
He sees promising signs of new listings coming on in the coming months, with property appraisals at the nationwide firm up by 48% on September 5 compared with the same time last year, and live listings, those listed in the last 28 days, up by 14.87%.
With the current shortage of listings at the moment, there is merit in at least thinking about listing sooner rather than later, says Harcourts Managing Director, Bryan Thomson.
If the vendor is selling their property to trade up to another one, and if the market goes up 10%, then the one they’re buying will go upeven more. If they sell now and buy, the gap will be smaller, says Bryan. He advises: ”Vendors should buy and sell property when they can and need to; and take the property on the day.”
If people are thinking of selling, at least they know the environment they’re going into now. No one can know what will happen in the summer - though chances are, more listings will be competing.
Strong competition among buyers for fewer properties mean strong buyer intent
The buyers are there now, agrees Ben Castle, CEO of Wellington agency, Tommy’s Real Estate. In comparison to 72 offers coming in on 59 properties for sale last August, 131 offers came in on 59 properties this August.
This number means that 60 buyers have missed out on property and are still actively in the market, he explains.
All of his agents are having discussions with vendors about timing their sale.
If sellers wait until November or January, there will be a glut of stock then and not as many buyers, so now’s the time for them to act, says Ben. His message to sellers is that in November the market may have moved, with 100 more properties for the same number of buyers.
“Interest rates have stabilised, property is priced right, and for a nice, sound property, there are multiple offers, whether it’s for a $2 million home or a first home buyer property. There will be seven, eight or nine offers on those homes,” says Ben.
In Dunedin, a market dominated by investors, listings have been dropping over the past few months, says Nidd Realty principal, Joe Nidd. In August 2022, there were 522 properties on the market, and in August 2023 there were 459 compared with peaks of 700 in March.
“Every week now we’re seeing an increase in open home attendees and far more first and second homes are going under multiple offers. It’s the most basic of indicators saying that the timing is good, it’s not just rear mirror vision thinking, but looking ahead,” he says.
Supply recent auction results and other stats to help sellers decide
There’s also plenty of data that agents can point to that indicates the market is waiting for their property now.
Ray White’s Daniel Coulson says he is not in the market of predicting what will happen in four or five months’ time. “I’m in the now, and what we know right now is that there are a good number of buyers competing for properties. If you look at our auctions the last 28 days, they’ve had an average of 3.1 registered bidders which is giving people real confidence.”
With expectations of greater competition in stock coming post-election, Ray White Manukau is putting together a gala auction on October 10 of up to 60 properties to give owners of South Auckland homes the opportunity to get on the market before more homes are listed in November.
Even Wellington, whose residents have a reputation for being a bit auction-shy, has been enjoying some real success in auctions recently.
Amanda Stevens, who manages the Ray White Wellington team, says the average number of registered bidders on each property would be around 8, much higher than the 3.1 national average. A four bedroom, one bathroom home in Newlands recently attracted 19 registered bidders.
Bayleys Real Estate is also reporting evidence of confident auction activity. Johnny Sinclair, National Director of Bayleys Residential, says buyer interest is very strong currently, with multiple offers happening and auctions being brought forward. He saw five cases of this last month alone.
The good news for sellers in today’s market is prices have definitely stabilised, says Johnny.
“There’s a big realisation that buyers are not expecting things to get any cheaper and sellers will not reach the peaks of the Covid market, and they’ve met in the middle,” he adds.
The impact if foreign buyers are given new freedoms
Some sellers of $2 million+ valued homes may want to wait to see if the National party gets in, as they would benefit from its proposed foreign buyers policy, opening the doors to overseas buyers once more.
Mark Harris, Managing Director of NZ Sotheby’s International Realty has looked into when a National-led government might introduce the new loosened up foreign buyer conditions, and it wouldn’t be immediate, he says.
According to his inquiries, the foreign buyer tax changes aren’t expected to be through before July 2024 if the election sees a National-led government come in.
“We’re already getting contact from clients offshore about the possible change, they’re excited about what it could mean for them, “ he says.
Mark’s message to local buyers is to make their purchases while they still have the market to themselves.
UP Real Estate director Barry Thom expects allowing more foreign buyers into the country could have a big impact on his central Auckland market.
At the moment, the $4 million+ market is not hugely active in terms of homes on the market, he says. Business owners, who typically hold these properties, are in wait-and-see mode, he adds.
At the other end of the spectrum, meanwhile, Barry says the first home buyers are busily buying at the moment, there’s no standoff.
“There’s a huge amount of activity, it doesn’t look like it’s being held up at all. I wonder if some buyers are trying to work with existing interest rate offers from the bank before anything happens. If the OCR changes again, maybe that’s enough of a reason for people to act now on the buyer side,” he says.