More home buyers willing to compromise
Optimism about the housing market is on the rise, with more than a quarter of people who look at property online planning to buy, Trade Me says.
The real estate website has released its annual State of the Nation report, which surveyed 2557 users, and found that 27.6% of respondents intended to buy this year, up from 21% last year. It also showed that 64.8% of respondents thought house prices would go up over the next year, a significant increase on 14.9% last year.
Many people looking to buy were willing to compromise on property size and quality to secure a purchase, with only 10.9% of respondents not prepared to compromise on any aspect of a property.
Trade Me Property sales director Gavin Lloyd said the broader report showed there had been a shift in consumer behaviour as people changed their spending habits to make their dollars stretch further.
A similar mindset appeared to be present in the property market, too, with 40.8% of respondents willing to compromise on property size to stay on budget and secure a home, he said. That mirrored what was seen on Trade Me, where the median floor size of watchlisted properties dropped as prices increased. But the type of property – townhouses versus apartments, for example – remained a non-negotiable for nearly four in five (21.4%) respondents, he said.
“For agents, this means pitching a potential buyer a smaller dwelling, rather than a different type, may be your path to success.
“The condition of the house is one of the largest areas of compromise. People are leaning into DIY, and the idea of doing longer-term improvements.”
Nearly 45% would compromise on the size of the garden or outdoor space, while 38.7% would compromise on the condition of a house. The 35- to 44-year-old bracket had the highest percentage of respondents who planned to buy in the next two years, at 62.3%.
Lloyd said that demographic was the hardest hit by rising mortgage rates, so the intent to buy highlighted the fact that property was still a very attractive investment for many New Zealanders.
“As well as upsizing, and this was the highest demographic who were looking for a home with an office, this cohort places a higher priority on relocation than their younger counterparts.”
They also valued location slightly above the average, which was probably due to schooling considerations, he said. “Prioritising school zones also speaks to why a lack of suitable properties is seen as a concern. They are more restricted as to what’s coming up in a specific area.”
While the 25- to 34-year-old bracket was the second-biggest group of aspiring buyers, at 61.5%, there was a split between first home buyers and those already on the ladder and upsizing, Lloyd said.
“This was one of the demographics most impacted by rising mortgage rates, and this financial burden is clearly evident in their willingness to compromise on size of both land and house of their next property.”
The report also showed that the cost of rent being on par with the cost of a mortgage was the top reason why renters were looking to buy. Trade Me’s latest rental price figures were released yesterday, and they had the national median weekly rent at $640 in February, up 1.6% on January. It marked the third month in a row that rents increased.
Some of the report’s other property market findings were that 23% of homeowners planned on selling in the next year, and that 29% of them wanted to sell to relocate.
Lloyd said that while there was now longer-term confidence in the property industry, after a tumultuous year, sellers were feeling unsure about market conditions in the immediate future. But if the market held pace during the autumn months, it would be a good indicator that the uplift of the last few months was not just a seasonal one, he said.
In an economic overview, Infometrics chief executive Brad Olsen said that despite the challenges facing the economy, inflation was trending in the right direction. Interest rate relief was expected within the next year, although not a huge amount of relief would be forthcoming, he said.