Sellers holding back due to lack of good properties to go to
The results from the latest homes.co.nz homeowner survey
As buyers peek over the parapet this spring and summer, homeowners across the country surveyed by Trade Me Property’s homes.co.nz are making decisions on their selling plans. And a respectable 14% of nearly 6000 respondents said they would sell within the next six months, according to the study published in October.
A further 7.24% plan to sell in the next 12 months and 18.35% mean to sell in the next one to two years.
The biggest fears of homeowners contemplating selling, were that they wouldn’t get the best price for their home (39.28%), that there was a lack of suitable properties for them to move to (19.17%),and they were concerned about rising interest rates (13.06%).Across Aotearoa, close to 60% of those we surveyed, felt it was a bad time to sell while 26% said it was a good time.
Homeowner sentiment at present isn’t dissimilar to March 2022, said Trade Me Property Sales Director Gavin Lloyd, who described the current conditions as a cooling of the market but by no means a crash. Supply levels of listings for the final quarter of the year were down on last quarter, he noted, which would mean prices would be relatively stable.
“Homeowners might be concerned that the property they move to next drops in value after they buy, but if they’re owning for the usual median of seven years, this shouldn’t be a concern,” he said.
Optimism about the market varies among the main centres
In Auckland, where 70% of homeowners thought it was a bad time to sell, and where 12% of homeowners planned to sell in the next six months, they were more concerned about rising interest rates compared with homeowners in Wellington or Canterbury.
Over a third of Auckland homeowners thought prices would decrease in the next 12 months (38%) while a larger percentage of buyers were expecting to see a further decline (50%).
One Aucklander surveyed, voiced a concern no doubt felt by others: “That the property I purchase post selling my current one will depreciate in value, leaving me with negative equity.”
Another worried when they turned around to buy after selling, vendors wouldn’t be willing to sell for a reasonable price.
Cantabrians were more concerned about inflation and the rising cost of living in their decision to sell or not while Wellingtonians were worried about a lack of buyer demand and that their home wouldn’t sell.
In Wellington, 13% of homeowners were planning to sell in the next six months, and while a key concern is they won’t get the best price for their home, (43%), they also worry about a lack of suitable properties on the market (18%).
One Wellington seller said they had multiple reasons for holding off putting their home on the market. They worried they wouldn’t sell for a good price and that it would be difficult to refinance and buy. They were also concerned about inflation and cost of living increases as well as rising interest rates.
Another respondent commented: “I’m waiting for some equilibrium, where my house and a future purchase has stability around the price you get and also what you want to buy.”
Property prices and interest rates in the year ahead
With property prices expected to drop by around 10% in 2022, Informetrics Principal Economist, Brad Olsen understands the concern felt by homeowners contemplating whether to sell or not.
Rising interest rates will continue to have a negative effect on prices and with more interest rate rises anticipated from the Reserve Bank this year and next, that means prices will continue to fall, he believes.
The economist is forecasting that the OCR will be up to 4.5% by April 2023 which will mean mortgage interest rates will be up at around 6% or 6.5%. This is nothing new to more established homeowners who were paying similar rates in 2017, said Brad, but to more recent homeowners used to 2% mortgage rates, it will take some digesting.
With a lot of variables in the current market, it’s understandable that people are sitting still for a while, with the general uncertainty, said the economist.
As one Auckland homeowner said in the homes.co.nz survey: “General volatility in the market and bank policies make it difficult to assess selling and buying opportunities.”
Homeowners selling in this market have to be aware it’s going to take longer to sell a home (average days on market for August is 49 days) so they’re going to have to be more inventive and ready to negotiate, said the Infometrics economist.
When it comes to pricing, among those people who have been in the housing market longer, their experience will really pay off at the moment, he added.
What sellers should know about buyers in the current market
For homeowners ready to move on with their lives and start making transactions, Tommy’s Real Estate agent Alice O’Styke said buyer activity is picking up in the capital which is good news for sellers.
In her Wellington market, there’s more movement among sellers, after not doing anything for two or three years, she said. “After the doom and gloom, people do want to start upsizing and downsizing,” she said.
A few months ago, buyers had a number of options but now Wellington is down on listings so it’s a good time to sell, said Alice.
Presentation will be vital, she said. If homeowners have a list of things to do to the house, they should get it done, if buyers think there’s a $50,000 roof bill to consider on top of the price, that will be a hard sell.
For those people who are selling to go on to a bigger home, the Tommy’s agent suggested it’s better to sell first because the “upsize homes” are still most popular so it will be a competitive market. Sellers who have to make an offer conditional on the sale of their own home, will have to make quite a high offer, she warned.
Ray White agent, Lawrence von Sturmer said sellers need to stay focused on their motivation. “Why are you selling now? The house doesn’t suit? There’s been a change in circumstances, you want to free up some money? Focus on the motivation rather than the value you might lose,” he advised.
If the house does sit on the market for months then it’s because the owner isn’t prepared to meet the market, he said.
The volume of listings in his market of Pt Chevalier and surrounds is down 20% to 30% but this could change. “Our area is family-oriented, people always buy and sell,” he said.
In reality more will sell than know it at the moment
And while the homes.co.nz survey said 14% of homeowners are planning to sell in the next six months, there will in reality likely be more who actually sell at this busy selling time of the year, said Emma Duncan from Anne Duncan Real Estate.
Of her recent vendors, a number brought their homes to the market quite suddenly. One seller had their tenant move out so they decided to put the home on the market and another was a marriage split. In another case, a couple got a building quote for renovations which came in at $1 million, then they went to an open home and put an offer in and it was accepted.
“Life happens,” said Emma. “Often you’re fine in your home, then your child who loved their tiny bedroom can’t stand it any more, or you might fall pregnant and your off-plan terrace house doesn’t suit anymore. That’s life, it throws things at you.”
And while Wellingtonians may be worried that they won’t find their next house after selling, in the Mt Albert real estate market, downsizers have good options on hand, said the Anne Duncan agent. “With the unitary plan there’s a lot more terrace houses and apartment stock available so people have got all those options of good lock ‘n leave properties.”
Auctions on the upturn in Christchurch
For potential sellers in Christchurch, buyers are around so auctions are a definite option again, said top Bayleys agent, Adam Heazlewood. His last four auctions have had two bidders or more.
“It’s really an encouraging sign, we’re finding auction attendance up,” he said.
Adam’s also seeing very good numbers at open homes, one recent open home had 14 groups, another 26. “It’s really encouraging numbers, it feels like the seasonal market we’re used to seeing in Christchurch,” he said.
Buyers and sellers are getting on with it, added the Bayleys agent. “They’re in the market because they have a need. A lot of these people have come to grips with the market and if they’re looking to buy and sell in a short time frame they’re no worse off,” he says.
Christchurch Tall Poppy agent, Debi Pratt said her office’s pipeline of listings coming up is quite good.
“Christchurch tends to hibernate in the winter but it does wake up and we’ll be quite active through spring and summer. I think November and December are going to be busy,” she said. In Ōtautahi, sellers are still accepting a lot of offers subject to sale, she added.
Buyers looking for quality homes, less of the do-ups
To homeowners wringing their hands over buying a new home and then seeing its value continue to go down, a respondent in the homes.co.nz survey has a good take on how to approach this
“It is our home. It wasn’t so much about when we bought- it’s about providing a home for our family,” they said.