Buyers stay focused despite market changes
House hunters aren’t rushing to look in different areas – though experts say it could be worth it as the market continues to cool, writes Miriam Bell.
House hunters have more options in the slowing market, but new information shows they aren’t rushing to look in different areas – although experts say it could be worth it.
Declining prices and a big increase in the number of homes for sale mean the market has turned in buyers’ favour. Wellington and Auckland have been classed as buyers markets for several months now.
Conventional wisdom has it that a buyer’s market is the ideal time to purchase a new home, and price falls in suburbs nationwide give them a greater variety of areas to choose from.
But analysis shows there has been little change in user search behaviours since the market has cooled. According to Realestate. co.nz, the most popular price range searches and regional sale searches have been consistent over the five months to the end of May.
Auckland, Canterbury, Waikato and Bay of Plenty, in that order, have been the top four regions searched for in that time. And that regional search preference has not changed from the same period last year.
Rising interest rates, tighter lending restrictions and market uncertainty are holding buyers back, Loan Market mortgage broker Bruce Patten says.
He has not observed a change in the areas people want to buy properties in, although some could be looking in a wider variety of suburbs because there are more properties at different prices across the market.
‘‘But most would not shift their thinking in where they want to end up living because of that. It largely comes down to what is in their price range, and also where their family and friends live.’’
Pre-approval times for many money means buyers should be broadening their search to different areas.
One of her clients had wanted to buy in Mt Eden, but decided to look in nearby suburbs as well. They ended up buying a good house in Western Springs for $1.85 million. It originally had a reserve of $2.3m.
Another client, a first-home buyer with a limited budget, was looking in the furthest reaches of West Auckland. But she has just managed to buy a house in Glen Eden for $940,000. It has development potential, as it is in a street being rezoned to urban zone.
Xiao says where people look to buy depends on their budget, but lots of properties with development potential are currently selling at a discount. That means it is worthwhile checking them out, especially if they are close to transport links, shops and schools.
‘‘Buyers looking to the future are better off buying these types of properties, rather than going for waterfront properties, or ones with sea views. It is always possible to work on the consents and wait for the market to pick up in 18 to 24 months’ time.’’
Property developer David Whitburn, former president of the Auckland Property Investors Association, thinks the areas active buyers are looking for property in are shifting.
There is a marked reduction in demand in many smaller population centres, he says. New CoreLogic figures also show some of the sharpest quarterly price drops have been in such areas.
‘‘Bigger cities are a safer bet, as they are likely to see more growth when migration settings
are improved and confidence comes back. Within the cities, suburbs with good infrastructure and amenities, such as shops and schools, are best placed.’’
Newer suburbs on the fringes have lots of supply, and more coming on board, and it puts downward pressure on price growth, so that is something to consider, he says.
‘‘Greater subsidisation of public transport means buying near railway stations and high frequency bus routes [aka main roads], is a good plan.’’
But buyers’ behaviour has changed too as they have more time and more options to look at, Whitburn says.
‘‘People are under less pressure and have the time to do due diligence and compare properties, so they can search for a home that best meets their needs, and investors can effectively locate properties with
Finax Home Loans property mentor positive cash flow.’’
Real estate consultant Lauren Mirabito agrees there has been a marked change in buyer behaviour, although she does not think it extends to the areas people are looking in.
‘‘I’m seeing widespread buyer reluctance to commit, which is making it much tougher to get