Buyers dig deep as record house prices hit the market.
The record on high asking prices has now been hit in the NZ housing market as buyers jostle for affordable home loans. Prices look set to continue climbing as a solution to the housing shortage in Auckland and Christchurch remains elusive, which is good news for sellers looking to capitalize on the unprecedented market conditions continuing to swing so much in their favor.
Sellers given cause to celebrate as market swings further in their favor
Whilst many NZ home buyers watch in mounting dismay as housing prices continue to climb on the back of supply shortages, mortgage rate hikes and high LVR restrictions having just kicked in, sellers continue to enjoy the optimal market conditions that have them sitting pretty, party hats in place and sparklers ablaze. The recent BNZ-REINZ Residential Market Survey gives clear indication that New Zealand continues to be a seller’s market with a net 51% of responding agents indicating that they feel prices are rising.
New home buyers in particular are being worst affected as investors drive the lion’s share of the market into their corner. The BNZ-REINZ survey indicates that interest shown by investors has climbed to 9% above the net average of 17% to 26%, whereas new home buyers showing an interest is currently at a net 24% - 10% below the net 34% average.
Just like Australia?
The fear now is that New Zealand looks set to following in Australia’s financial footsteps by becoming a market where investors are the key driving force in many markets. The fact of the matter is that more and more first time Kiwi home buyers are going to be shoved to the sidelines as the bigger players with the equity and capital to meet the new high LVR restrictions and higher prices demanded by sellers jostle for the best deals in the low LVR market. And things don’t look to be getting much better from a buyers perspective as the trend in pricing is seen to be unwaveringly upward.
For those who were banking on the price hikes remaining confined to the housing hotbeds of Auckland and Christchurch, the latest New Zealand Property Report by Realestate.co.nz will come as somewhat of a blow. Waikato and Coromandel have just both recorded the highest asking prices to date, with the average price having risen 8% in the last year to $466,526. Of course, from the seller’s perspective, such news will no doubt only stoke the fires of financial gain they are set to enjoy as their houses go on the market.
Buyers given false hope
Some buyers may have grown optimistic at the news that the BNZ-REINZ survey clearly indicates a marked spike in the number of home owners asking for appraisals (meaning a rise in actual listings soon) – from a net 0% of real estate agents to 21%. But according to BNZ chief economist Tony Alexander, the sudden jump has more to do with the kinds of seasonal changes observed in 2011 and 2012 than in any real intent on behalf of home owners to list.
So, for now and into the foreseeable future, sellers continue to revel in the face of adverse market conditions for buyers. As an ever increasing stream of investors pour through the doors of open house showings in the housing hotbeds of Auckland and Christchurch, eager to snatch up deals that many first time buyers can no longer afford, the outlook for many young kiwi house buyers looking to secure an affordable home loan remains somewhat grim.