Ch-Ch Real Estate Update - June 23

Wow, what a difference a month makes!?Typically, the real estate market slows over winter, however, my teams and I have been busy appraising and listing properties throughout the month.

Christchurch City Median Sales Prices for June 2023 ??

Harcourts vs. All Real Estate Companies Combined

Christchurch Median Sale Price $650,500

???Harcourts Median Sale Price $690,000??

Source: REINZ statistics, Christchurch results as at 18 July 2023

Statistically speaking, June was our best month of the year, and the days to sell dropped from over 40 days down to 33. The media has changed their tune and commentary across the financial and property sector indicates we have reached the bottom of the property cycle. With the OCR remaining the same,?inflation rates finally easing (albeit slowly)?and house prices rising slightly on the previous month, these are all positive indicators. ?? When you couple this with the?net positive migration rates, the market is set to rebound, perhaps quicker than expected!

The real concern to keep an eye on is the impact of the government’s tightening of policies on?property investors over the last several?years. The potential further?lack of investors keen to get back into the market means there are simply not going to be enough rental properties for the 60,000-90,000 new migrants coming into NZ.

Looking at the housing policies so far from all political parties, ACT seems to resonate well with the investor sector. If they form part of the next government, expect to see investors aggressively back in the market driving prices up. First-home buyers now is your moment. I don’t think there will be a better opportunity than right now. Depending on the polling leading into October, you will likely see savvy investors jumping back in and targeting new builds. That’s my prediction in any case from past personal?experience and by closely monitoring the investor trends in the market.

Winter is a great time to take stock of your most important asset(s). Please let me know if you'd like a free appraisal on your home or investment property portfolio?in the current, hyper-local market. ??

Stay warm, get out and explore our beautiful region and?take advantage of Canterbury's famous blue-sky days.???

New Zealand Housing Market is?Primed for a Rebound

New Zealand’s housing market has seen its fair share of ups and downs over the years, with the most recent drop in property prices linked to interest rate rises and cost of living pressures. But the tide may be turning, and there’s growing evidence to support a property rebound sooner than anticipated.

Buyers choosing to wait for property prices to go lower should consider the impact that decision could have on borrowing power once property prices go up.

Demand vs. Supply?-?Demand for housing in New Zealand continues to grow, driven by a shortage of affordable housing and a surge in net migration.

Across the country, real estate agents are reporting an increase in buyers at open homes, in particular first-home buyers, while at the same time, auction clearance rates in Auckland are showing early signs of an upward trend, suggesting this market is coming back to life far quicker than anticipated.

In his recent monthly survey, economist Tony Alexander reports that buyers are becoming less worried about property prices falling and the fear of overpaying – FOOP – and more concerned about missing out, as the level of FOMO is starting to creep up.

Property investors re-entering the market?-?The housing market could see strong interest from property investors anticipating a change in government in the upcoming election, further increasing competition and driving up property prices.

Legislative changes would make it more attractive for investors to return to the market, with National pledging to reinstate a key tax advantage for investors that Labour is currently phasing out.

Prior to 1 October 2021, mortgage interest deductibility allowed investors to subtract mortgage interest payments from their rental income for tax purposes. But this is being phased out to incentivise property investors to build new homes in an effort to fix the housing crisis.

Additionally, National has pledged to reduce the bright-line test from between five and ten years to two, effectively removing any capital gains tax for most investors.

A pause on the OCR Another factor that could drive the housing market upward is the Reserve Bank of New Zealand’s (RBNZ) recent indication that it won’t be lifting the official cash rate (OCR) higher than 5.5 per cent. This follows an increase of 25 basis points earlier in May 2023.

While it’s impossible to completely rule out that the OCR will go any higher, or that the RBNZ will start cutting rates in 2023, it’s reasonable to assume that interest rates could start to fall as early as the first quarter of next year.

The New Zealand housing market is well-placed to rebound between now and the end of 2024. With confidence growing and a period of stability increasingly likely, the next year is poised to present opportunities for first-home buyers.

A rebound sooner than you think?-?New Zealand's housing market is poised for a rebound in 2023, driven by increasing demand coupled with ongoing supply shortages, a potential change in government and legislature, and the RBNZ’s indication of no further OCR movement.

By taking some proactive steps, first-home buyers can position themselves for success to make homeownership a reality