First-home buyers feel pinch
A Palmerston North woman lost count of how many open homes she attended before she had an offer to buy a house accepted.
Sara Westcott’s search for a house in the city began in October and before having an offer accepted on a Cloverlea threebedroom house last month, she had made eight unsuccessful offers. Settlement day is in April.
She and other buyers are facing soaring prices that set new records every month; few homes on the market; and, as revealed by new figures from property data and analytics company CoreLogic, more sales being made to investors.
With interest rates at historically low levels, those with equity in homes are using that to buy more property, leaving people such as Westcott facing increased competition as they try to gain a foothold on the housing ladder.
‘‘I have probably lost count of how many open homes I went to.’’
Every Sunday she would visit at least four or five, along with scores of other people. One weekend she attended nine.
She had a rule for her son James Cook, 9, and daughter Emma Cook, 12: No exclamations of ‘‘I love this place’’. There was no point getting attached.
As she missed out on more properties, Westcott, 37, thought about looking beyond Palmerston North, to places such as Ashhurst, Bulls, Rongotea and Feilding. ‘‘I was thinking I was being priced out of Palmy ... There are a lot of people like me in the same situation.’’
With so many buyers interested in properties, some were making over-the-odds offers that were hard to compete against, sometimes without conditions. One house Westcott made an offer on had 25 others. Meanwhile, the number of houses available in the $400,000-$500,000 range continued to dwindle and houses in the first-home bracket were selling $100,000 over the asking price. ‘‘Sometimes I was very close. ‘‘Sometimes I thought I was going to be ballpark and something outrageous would come along.’’
Westcott, a single mother who works as a resource management planner, said her offers included a letter about herself, saying what she loved about the respective houses.
The Corelogic figures show the battle Westcott and others in her situation face.
In January, 34 per cent of sales went to multiple property owners, up from 29 per cent last year and 22 per cent in 2018.
Just 64 homes sold in Palmerston North in January, the lowest number since 62 sold in January 2011, during a flat period in the property market. In January last year 82 houses sold, 73 in 2019 and 101 in 2018.
Owner-occupiers moving house accounted for 25 per cent of sales, a ‘‘reasonably quiet’’ figure similar to other areas, said Corelogic senior property economist Kelvin Davidson.
‘‘This is often due to a lack of listings and so those owneroccupiers simply can’t find their next home. Of course, with term deposit rates low and mortgage rates low too, it is understandable that people will be looking for higher returns elsewhere, and indeed I suspect that some of these investors will have been buying on the expectation of further capital gains, which in the process actually feeds into those capital gains.’’
Davidson said average values in Palmerston North were up by about 23 per cent over the past year, and suburbs such as Westbrook and Highbury had experienced a 25 per cent rise on median values.
The flipside to that was declining affordability.
Real Estate Institute of New Zealand figures show the median sale price in January was $655,000, another record high.
Nine of the 64 sales that month were for properties under $500,000 and the median listing price was $575,000.
The median sale price for January last year was $500,000.
It was $406,500 in 2019 and $369,500 in 2018.
The institute’s Manawatu¯ spokesman, Andy Stewart, from the Professionals, said people with equity had realised the market was not going to slow, so were buying more property rather than having money in the bank earning nothing.
‘‘It is business as unusual, because I have never experienced this. In October last year we were going: Wow, we have hit [a median price of] $619,500. That was only four months ago.’’