Increasing affordability is the main positive to be taken from the latest data on New Zealand’s real estate market.
For the three months to the end of August, New Zealand’s average price was $957,000 – the same level of two years ago.
Amid economic concerns, buyers with the courage to strike out now have a rare opportunity to purchase properties for prices that won’t last forever.
Upsizers determined to hang onto their properties until values climb again will be buying at higher prices later on. So, holding onto your property, despite a desire to climb the property ladder, may be a self-defeating strategy.
Market momentum always provides opportunities, regardless of its direction. And excellent buying opportunities are emerging, especially in the metropolitan areas.
The latest OneRoof market report says the bellwether market of Auckland saw prices dip 2.8% in the 12 weeks to the end of August.
While values may be at a four-year low, the average deal size hovers around $1.26 million.
During Covid, Auckland’s average sale tipped $1.57 million. But as a new Westpac IQ market report points out, NZ saw one of the largest global spikes in property values during the pandemic. Therefore, a market correction has been inevitable, says Westpac.
Nevertheless, 35 Auckland suburbs recorded quarterly value growth with Omaha rising 4.1% to reach an average price of $3 million.
The OneRoof report says that of the 917 suburbs it covers nationwide, 465 have registered year-on-year value increases.
Positive price trends, albeit modest ones, have been registered in four regions – Taranaki, Tasman, Southland and Northland.
The recent stellar market performer, Queenstown-Lakes, has seen the heat come out of its market. Prices stayed static in the 12 weeks to the end of August.
Our current market conditions require a careful buying strategy, especially if you’re upsizing. Here are eight tips to help you:
Long-term value – It’s easy to get caught up in the drama of the market. However, your buying strategy should focus on long-term, future value. Making a property purchase isn’t just about price but the ultimate capital gain you can expect to achieve.
Talk to agents – The best deals will be secured by identifying motivated sellers. So, talk to agents and use their networks to seek out the attractive opportunities in your target areas.
Price reductions – Your market radar should be attuned to vendors who reduce their prices. It’s a signal they’re keen to strike a deal. Perhaps they asked too much initially, so this scenario doesn’t always represent an opportunity to grab a bargain.
Empty nests – A vacant home can often be a great buying opportunity. It’s possible the owner is now juggling two mortgages or servicing a bridging loan. They may be anxious to negotiate a sale.
Negotiate strategically – If you see a home you love, don’t low-ball your offer. The vendor will dismiss you as a serious buyer. Instead, make an offer that reflects today’s market conditions. Justifying your bid with market data puts you in a strong position.
Deposit – Are you able to secure a larger deposit to limit the size of your loan? If so, you’ll substantially reduce the overall cost of mortgage interest. Over the term of your mortgage, you’ll save thousands of dollars.
War chest – A mortgage pre-approval from your lender will confirm your borrowing capacity and determine your budget. This will ensure you focus on the size and quality of home that is affordable.
Walk away position – Despite current market conditions, sellers are not desperate. Mortgage defaults remain low. Consequently, your negotiation strategy should reflect today’s fair value. If you cannot achieve that with a vendor, don’t be afraid to move on. There is always another home waiting for you.