For some , hearing that prices have dropped a couple of percentage points since their peak in last year is a worrying thought . Still , it should be considered in context with the unprecedented growth in median prices since the beginning of the pandemic . While the price you could achieve today may not be as high as it would have been in October last year , it is potentially going to be higher than what it may be in October this year .
In October last year , coinciding with what many experts refer to as the peak of the market during this cycle , The Reserve Bank of New Zealand announced its first increase in the official cash rate since 2014 . This signalled with immediate effect to the market that the lending environment was beginning to tighten . This , coupled with the introduction of the Consumer Credit and Finance Act restrictions , meant that accessing money has been attributed as the main factor in reigning in price escalation .
The question many sellers are now asking is , if the cost of borrowing continues to increase , what influence does this have on the affordability levels of potential purchasers . In real terms , if money costs more to borrow , the amount of money someone is able to service will decrease . The reserve bank has signalled that further rate rises are likely to continue in the short to medium term .
There are a number of other considerations to be taken into account when you decide whether now is the right time to list your property for sale and all of the factors below can combine to influence an outcome .
• Total number of properties for sale ( competition )
• Wider economic conditions
• Method of sale
• The time it takes to sell a property
The burden of compromise has , for the most part , fallen on the buyer since the beginning of the pandemic . There has been more demand than supply , which has meant those looking to purchase weren ’ t necessarily able to tick every box when it came to their wishlist . Now , as we progress to a more balanced market and buyers have more choice of property , the burden of compromise starts to shift toward the seller and for property owners , changing the number of bedrooms , position of a home , or construction of a property remains unchangeable . What buyers are looking for owners to compromise on , however , is price .
Choosing the most appropriate method of sale for your market conditions and personal needs remains important . We know the most active purchasers in the market typically inquire early on property and are attracted to ‘ fresh ’ homes coming onto the market . This means that most properties generate higher levels of interest in the early days of being on the market , and over time , the level of interest starts to wane . This means that the method of sale chosen should be one that condenses the process into a finite period of time and potentially minimises the need for the compromises discussed above .
As the economy emerges from the more restrictive forms of trading over the past couple of years , there is commentary almost daily around skill and labour shortages which could hinder the wider economic recovery for New Zealand and is likely to become more pronounced in the year ahead . This is why many are suggesting that conditions could see further headwinds before a form of economic recovery occurs .