If you’re puzzling over New Zealand’s real estate scene, trying to figure out whether you should jump into the market to upgrade or downsize, there are at least five factors that might be on your radar.
Of course, you’ll think we’re going to list price trends as the first and foremost of an owner’s concern when considering whether to sell. Not so.
Our agents believe that defining your own circumstances is the essential ingredient to a successful property purchase.
We’ve found the most successful moves have been made by owners who don’t sweat on every economic indicator or property market survey, but focus on themselves.
They sell when they are ready, not when they have read the tea leaves of property prices for the next six to 12 weeks.
Why is this? It’s simple, really. When the market is slow, the value of your home might have fallen, but your buying will be cheaper. Conversely, when the market is gangbusters, everything is higher – both your asking price and the money you spend on the next transaction.
A strong market delivers a couple of other variables for you, too.
Firstly, higher prices mean a higher tax on the purchase. Just as seriously, you may be able to sell quickly but buying can become a challenge with so much competition.
You wouldn’t be the first owner to panic and find somewhere to rent because you were beaten by other buyers to the properties you tried to purchase. Or worse, you buy a place that you don’t really love. That can be a costly mistake. Buyer’s remorse is very real in property.
So, below, we’ve listed five other factors that may be weighing on your mind.
Importantly, none are so important as to put you off transacting if you are ready and keen.
It’s The Economy: No sector, including property, travels well when the overall economy is struggling. The key here is to watch values and make sure you don’t overspend on your next property.
Tough Talking: There are lots of buyers in the NZ market, but they’re ready to bargain. They know the market is on the slow side, so they’re squeezing owners on price. Have your negotiation position and price expectation clear before jumping in.
Debt Rules: The new Debt-to-Income (DIT) lender rules designed to stop a future real estate bubble are definitely worth a try, but it’s adding a little more caution to buyer attitudes.
Cost of Cash: The recent drop in the Official Cash Rate (OCR) from 5.5% to 5.25% is good news but insufficient to swing the market momentum into positive territory. Economists say we need to see a full 1% reduction to make a meaningful difference.
Bright future? The July changes to the Brightline test to allow investors to escape capital gains tax more easily are supposed to give the market a major injection of properties for sale. While activity is up, it’s not yet game-changing.