Marlborough Express - Weekend Express
Are the days of 10-plus offers numbered?
OPINION: It was no surprise to see the March property statistics continue to soar in 2021.
Across the country many new records were set as some of the team of 5 million fought over property on the back of record low interest rates, few property options and strong value gains.
What can you expect from the April statistics? Much of the same, although it will not be a true reflection of the market.
Statistics are obviously historical. Two major factors which came into play for the property market was lending-to-value restrictions and the new government regulations, mainly targeted at property investors and landlords.
The quick pivot by the government caused some buyers to act in order to beat the new restrictions and many of these transactions will settle within the April statistic period.
With any period of change the certainty for consumers on property gains is no longer. Commentary throughout the country again highlights the property market is easing of property growth, therefore many buyers are now choosing to wait to see what the market will do.
Last year’s pause in the market due to Covid-19 resulted in a build-up of buyers who sprang into action pre-Christmas, creating a buyer frenzy and high competition. Will this happen again?
The fact is the main drivers behind the pressure on the property market remain: there are not enough properties on the market to meet buyer demand; the time to develop land and build has not met market demand to date; interest rates are low and likely to remain so for some time; other investments all carry risk or require homework to understand the process (many people are busy and just want a ‘set and forget’ investment property).
With the recent shift in strategy from the government to apply more restrictions to landlords to disincentivise property investment, this has and will take its toll.
Some property investors are becoming fed up with the changes and are now looking to pivot and sell investment properties. While is this great for the first-home buyer to attain property ownership, those commencing independence and renting will be impacted by fewer rental properties, higher rental demands and subsequently rising rent figures.
The outlook is likely to see more properties available on the residential market and reducing the number of multiple offers on properties. Some investors will sell off older homes in favour of building a new property to contribute to the solution (more houses) while reducing maintenance costs.
Available land to build properties is under strain, buyer interest in land is high, continuing to gather competition and increasing prices.
The speed to free up land will be a contributing factor as the Government offers infrastructure support to provide more land for new builds. The council’s plan and willingness of landowners to sell/develop are just a few of the considerations.
Simply (and traditionally), this is not a fast process. However, should an abundance of land become available, there is continued skilled worker and build material shortage to contend with.
I believe the recent changes will be enough to ease the buyer demand in the immediate future. Some will sit and wait to see the outcome; others will enjoy making offers on properties and may find themselves able to negotiate.
We are likely to still have competition on properties, just not all of them. The days of 10-plus offers on a property are numbered.
And investor landlords, many of whom are minor investors, will now look elsewhere to invest their money.
Options such has commercial property may be favoured, viticulture is obviously strong in our region, dairy and beef are again showing strength and, of course, the share market has provided some success for those who invested.
Craig Searle is the sales manager for Harcourts Marlborough.