Keep your dream alive
Climbing prices can spark a sense of property FOMO. If you haven’t already bought, have you missed your chance? Gill South finds out.
If you want to get on the property ladder, have you missed the boat? We’ve seen extraordinary home sales in real estate markets around the country in recent months. March sales were at a 14-year high, according to REINZ (Real Estate Institute of New Zealand).
The country saw median prices of residential property increase by 24.3 per cent across the country to $826,300 in the month too.
For house hunters, especially first-home buyers, who are desperately trying to buy, each missed tender or outbid auction puts house prices seemingly another step out of reach. It can feel like the market is leaving you behind.
But there is no reason to panic. Even if you have not yet managed to buy, that doesn’t necessarily mean you have missed out for good, according to real estate, financial and economic commentators.
Flattening the spike
Economists and real estate agents agree that prices will not keep going up nationwide at the rate they have been recently.
They will keep going up, but at more normal rates, they predict. The market may also ease in the short term as investors keep their powder dry while they digest recent Government changes for property investor taxes.
Independent economist Tony Alexander said that the sense of FOMO (fear of missing out) recently seen among buyers is starting to fade.
In his most recent survey of real estate agents, 66 per cent said there was still a sense of FOMO, compared with 88 per cent in March. He thinks this will reduce even further.
A net 23 per cent of agents were
seeing fewer people at open homes and a net 41 per cent of agents were seeing fewer investors.
‘‘I don’t think people need to rush,’’ Alexander said. ‘‘If you’re looking to buy, see how many [investors] do pull out of the market and how many vendors come forward because they don’t want to wait any longer.
‘‘An environment where time is on the side of the buyers is not there yet, but it is coming.’’
John Bolton, managing director of Squirrel Mortgages, believes that prices are likely to flatten. There remains a massive supply/demand imbalance for entry-level homes, but the experience of constantly missing out will reduce, and things will feel a bit more ‘‘normal’’, he believes.
REINZ acting chief executive Wendy Alexander also expected to continue to see house prices continue to rise, but at a slower pace than over the past six to 12 months.
More homes around corner
Vendors who have been holding off and waiting for the best price may start to put their properties up for sale while the market is on a high.
Already, there are more properties on the market than is normal for this time of year.
Tommy’s Real Estate’s Nicki Cruickshank said the number of homes the agent has on the market is more reflective of a usual January or February, rather than an autumn April.
Sellers are now experiencing their own version of FOMO, said Cruickshank. ‘‘What we’ve noticed in the past two or three weeks is people starting to make predictions. So people are putting their house on the market now, and stock levels are higher than normal.
‘‘I do think there are a few people thinking it’s time to sell, in case they miss out on the great prices. But there’s still strong demand, I would say that,’’ she said.
Forget the market
You can talk about prices and trends until you’re blue in the face, but if you are buying your own home, rather than an investment, it might not really matter all that much.
‘‘The best time to buy is when you’re ready,’’ said Cruickshank. ‘‘Everyone thinks they’ve paid too much when they buy and then a couple of years later [when prices rise] thinks, thank goodness. . .’’
When you’re stressed, you tend to make bad decisions, according to financial adviser Lisa Dudson.
‘‘When you’re in the middle of something, you always feel like it’s never going to end. But it’s just a phase. Take a deep breath,’’ she said.
‘‘Even if you can’t get what you want right now, keep trucking on, and saving for your deposit, and fine-tuning what you are looking for. There will come a time when you can buy. There’s always something you can do to move yourself forward.’’
Ray White’s Tim Hawes thinks if you want to buy, it’s worth getting on the ladder as soon as you can. ‘‘My take on it with firsthome buyers is that it’s irrelevant what’s happening in the marketplace. You still have to live somewhere, you’re creating an asset and credit history with the bank,’’ he said.
Just be pragmatic. Shorten your horizons. The dream home may just be a bridge too far, especially in Wellington and Auckland, so look at owning a first home for two to five years, rather than 10 years, as a stepping stone.
‘‘There’s not a lot of good, entry-level stock so a lot of firsthome buyers will have to front into the reality that they can’t buy a standalone house. It’ll more likely be a terraced house or apartment,’’ said Bolton.
Waiting for prices to fall?
CoreLogic senior economist Kelvin Davidson thinks we’re unlikely to see a big drop in prices in the near future.
‘‘I don’t think house prices will fall. Interest rates are as low as they’re going to be,’’ he said. ‘‘As a first-home buyer, there’s not much reason to wait if you want to own a house and commit to an area and if you’re confident in your job and in where you want to live.’’
He does think that any slowing in the market will help buyers feel less pressured, however.
‘‘That competition at open homes won’t be as strong, there won’t be the froth and fervour to buy just anything. It does buy [first-time buyers] some time, but I wouldn’t be holding on for prices to fall.’’