House market shift favours buyers
House prices are still high, but the market seems to be at a pivot point. Joanna Davis finds out if it’s possible to get a bargain if you buy now.
New Zealand house prices are still skyhigh, but the tide is turning. ANZ economists are now predicting a 10% decline in house prices this year, up from January’s forecast of a 7% fall.
Of course, interest rates are rising at the same time, so homeownership is still no walk in the park.
We asked the experts, and those house hunting, whether it’s a good time to buy right now, and if so, how home buyers can get the best deal in this kind of market. figures, we’re seeing stock levels are up, sales are taking a little longer and there is less urgency in the market, which means buyers have more choice and time to make the right decisions for them.
‘‘As that demand-side pressure eases, so too does upward pressure on prices.
‘‘And the figures suggest that we are shifting to a market that favours buyers.
‘‘That said, increases to the official cash rate – up
50 basis points on April 13, and with an outlook of further increases – tighter lending criteria, and prices that are still 7.9% up on this time last year will moderate buyer demand.’’
Gemma Ellis, an accounting student, and her partner, Shavhan Harris, a builder, are looking to buy a home costing up to $400,000 in Invercargill this year.
Gemma Ellis says there are many homes on the market in Invercargill between $300,000 and $400,000. This three-bedroom house in Strathern is for sale by buyer inquiry over $319,000.
With house prices dropping, is it a good time to buy?
‘‘What I’ve learned from accounting is the main concern is a significant change in the local environment.
‘‘For Invercargill, this change would be [the aluminium smelter at] Tiwai Point closing, as people would lose their jobs and move to places with other work, potentially flooding the housing market and dropping prices. So, for us, the local market matters more than the national market.
‘‘We also decided to buy now as a new mall is being built which is due to finish and open by the end of next year.
‘‘This will mean an increase in jobs and more people moving to fill those positions, so prices will rise. We wanted to get in before this.
‘‘So in short, yes, it’s still a good time for us because of these local changes, especially since the bank we’re going with has fixed rates.’’
Would you advise other first-home buyers to wait to see if prices drop further to try to get a bargain?
‘‘No, I would tell them to look at their local economy and if there are any large changes looming that would affect the need or want for housing.
‘‘I’d also pay attention to legislation changes, like limits on rental properties and capital gains tax. Basically, learn some economics and understand the changes.
‘‘If you get [mortgage] preapproval and want to wait, then you’re in a better position to jump when it happens.’’
Do you wish you had bought 18 months ago?
‘‘We weren’t together then, so we didn’t have an opportunity to buy as it’s near impossible to do it alone. We have a good understanding and trust of each other, but we’re still going to do a prenup [prenuptial or contracting-out agreement] because we both know that sometimes it hits the fan.’’