‘Mum and dad’ investors selling up
The double impact of declining property prices and rising interest rates are seeing ‘‘mum and dad’’ property investors in Taupō looking to sell their retirement nest eggs early.
Tall Poppy Real Estate Taupō business partner Tristy Vadnjal said retirement plans were being impacted by changes in the property market and with property long being considered a key part of financial planning, mum and dad investors often own at least one house to help fund their retirement.
‘‘However, the current economic conditions are wreaking havoc on retirement plans, with some owners needing to sell 10 to 15 years earlier than [they] originally intended,’’ Vadnjal said.
She said her team was seeing an increasing number of investors who bought a property in the region as part of their retirement plan have to sell as financial pressures took their toll.
‘‘We have people from Auckland, Wellington and Hamilton who have purchased rentals in Taupō with a view to eventually moving here and it becoming their forever home when they retire.
‘‘However, every time there’s a jump in the OCR (Official Cash Rate), we see more choosing to sell because they can’t keep up with the mounting financial pressures.
‘‘Last year, we would typically see two to four houses a week listed for sale across Taupō, but now it is closer to five to seven, including those who had invested in Taupō for their future.’’
Vadnjal said the Real Estate Institute of New Zealand’s (REINZ) latest figures found the median property value in Taupō dropped 11.8% in April and properties owned by mum and dad investors were often in the first homebuyer bracket of $600,000 to $650,000.
She said offers were more frequently falling through because of finance requirements.
‘‘Banks are recalculating or completely withdrawing finance approvals,’’ she said.
‘‘We have buyers who complete all of their due diligence, and when they go back to the bank are being told they can no longer borrow to the same level they had previously been approved for.
‘‘Things like maintenance and repair costs are also being factored into borrowing, and we’ve seen a few offers fall through because of that.’’
But, according to the latest data from realestate.co.nz, the number of properties being listed for sale in the region dropped significantly in April, leaving buyers with less choice than they did 12 months ago.
Data from realestate.co.nz found new property listings in Taupō and the central North Island were down 17.1% when compared to April 2022.
The company’s spokesperson Vanessa Williams said patience was essential for both buyers and sellers.
‘‘New listings to come onto the market during April were down 18.9% nationally, while stock remained up in almost all regions compared to April 2022 ... it tells us that buyers are taking their time.
‘‘Credit conditions remain tight for buyers while interest rates are uncertain for anyone without a crystal ball. Buyers are still searching for property, but many are delaying their purchase decisions given the current economic climate,’’ Williams said.
‘‘March data from REINZ also confirms this, with days to sell rising to 45 days in March 2023 – nine days longer than in March 2022.’’
However, Vadnjal said despite recent challenges, the market was starting to show signs of positivity.
‘‘After a long period of financial hardship, we are starting to see some signs of the sunshine of hope.
‘‘REINZ insights show that while there have been knock-on effects driven by circumstances such as the damage from Cyclone Gabrielle, the region is now seeing a return of potential buyers coming to the area – drawn by opportunities and events such as the recent Taupō Ironman.