Crisis – what housing crisis?
The housing shortage is top of mind to New Zealanders, according to Neighbourly.co.nz’s online opinion poll. Politicians are in the ring with their gloves off, trying to push their latest solution and a positive election result in the same breath.
From home owner to prospective buyer, real estate agent to banker, the pressure is on to sell well, but more importantly buy quickly, or miss out.
Property auctions are proving popular in the bigger cities because of a promised end date and a mass gathering of people with cash in hand.
Andy Stewart, REINZ spokesperson for Manawatu, says auctions aren’t as popular in Palmerston North, making up only around three or four per cent of sales.
‘‘Auctions are very popular in Auckland, Tauranga and Wellington right now but here in Palmerston North we have a lot of first home buyers and the auction process doesn’t especially suit them.’’
Before bidding at auction, Andy explains there is the required due diligence of property valuations et cetera that are a significant cost with no guarantee of a successful outcome.
‘‘Auction is a very viable method and it’s fantastic for the vendors, providing a definite end date and the best price from multiple bidders, but the dollars up front for a first home buyer make buying at auction less attractive.’’
First home owners here are in a hurry to secure a property before the price increases get away on them. Investors are reaching beyond the bigger centres and have discovered excellent value for money in Manawatu.
Property valuer Jason Hockley says the real estate market in Manawatu has seen a large price increase from April into May, with June increasing slightly again.
‘‘The size of this increase can be compared to the acceleration rate we last saw during the major price uplift of 2004 to 2007,’’ Jason explains.
The shortage of houses for sale is causing everyone great concern. There are first home buyers with money in hand and current home owners wanting to sell, with both afraid of not finding a house to buy; there are agents without listings and banks with hundreds of preapproved loans and no houses for clients to settle on.
‘‘Buyer desperation has been a major driver for price rises as many potential purchasers continue to miss out. Everyone’s becoming increasingly frantic,’’ Jason confirms.
He explains we have now had a fairly positive market since the middle of 2014 and low interest rates continue to underpin interest from home owners and investors.
‘‘Palmerston North still offers some of the most affordable homes in the country and many investors are seeking better returns than the current bank deposit rates provide.’’
Jason suggests the key question now is, will these trends continue?
‘‘On the surface of fundamental economic drivers, supply and demand is still severely out of equilibrium. It would take a phenomenal political or global event to change this pattern.’’
He adds the Reserve Bank appears to be constantly ‘‘under the pump’’ to keep interest rates low as the currency markets continue to hurt exporters.
‘‘The primary supply of houses needs ramping up as there’s a critical need for many new homes in the city.
‘‘If this was the case and the supply did increase, then the secondary supply market of existing older homes would have some pressure taken off. Therefore with these drivers at work I anticipate that the market is likely to be even higher come Christmas time.’’
Jason anticipates discussion on the housing market will soon be overshadowed by upcoming global events such as the Olympics and the US elections in November.
‘‘These events may take some of the media spotlight off the housing market, the US elections especially will probably make for some interesting following.’’
This year properties in Manawatu, Horowhenua and Whanganui are up for revaluation and Jason anticipates an extremely busy 12 months.