Market Update July 2021
The Real Estate Institute of New Zealand has just released the industry data for the month of June and it makes for sobering reading if you are a buyer in the current market.
Headlined, “House prices continue to rise across the country defying expectations”, it goes on to outline what is happening region by region. What surprises me is why people still consider what is happening in the property market as “defying expectations”. What we are experiencing here in New Zealand is being replicated to a greater or lesser extent around the globe in other OECD countries. It has been said so many times, while we continue to have Kiwis pouring back into the country via MIQ from other parts of the globe where they have been living, we will continue to see a massive housing shortage. This is particularly true while the rules and regulations around property development are being tinkered with by the Government, and supply and labour chains remain constrained within the building industry. When you hear that MIQ is fully booked until November and people are prepared to pay thousands of dollars to get a place via queue jumping websites, it is clear that the pressure on our housing will not diminish in the short term.
Looking back on the comment I wrote in June 2020, it was apparent then that the market was starting this trend of “defying expectations”.
“While June has been the first full trading month for the real estate industry since lockdown, I think it is fair to say the results have surprised everyone. The Real Estate Institute figures show remarkably similar trading conditions right across the country, so much so that June 2020 had more property sales nationally than any June for the last four years.”
This June we have just experienced the highest number of sales nationally for the last five years. Selling property is not the issue, it is the lack of availability of property to sell in order to meet demand that is the issue. Typically over our winter months, we see slightly less property than normal come to the market, and this June was a typical June. Total volume of new stock coming to the market is down just slightly on June last year, by about 6% which is not a big difference. However, because it is being sold more quickly and there is so much buyer interest, we are also seeing a rapidly reducing volume of “stock on hand” right across Christchurch. Currently we have half the amount of stock available to sell compared to this time last year.
This decreasing availability of property to the market is by far the biggest concern. Quite literally we do not have enough houses to meet everyone’s needs, regardless of whether a person is renting or buying to live in.
A good snapshot of what has happened over the past two years can be seen in these June figures for Christchurch.
Along with the increasing house prices, we can see that the days on the market has also dropped dramatically, and this is a feature of the current market. The trends we are currently seeing will not change any time in the near future. Quite simply there is currently too much pressure in the system and it will not disappear while this pandemic continues to play out around the globe.
There is no doubt that the figures and this commentary make for sobering reading. However, if you are a seller of property in this market, there is no doubt that now is the time you can achieve a very good sale price. Having said that, it amazes me that some people and companies will advertise and promote that they can achieve a sale “off market” currently. If you are a seller or thinking of selling soon, selling “off market” is the very worst thing you could do. Why would you contemplate selling to the first person who makes an offer “off market” when you could have multiple buyers looking at and bidding to buy your property. In this type of market, the false economy of “saving a thousand or two” on a commission can literally make many tens of thousands, if not hundreds of thousands of dollars difference on the selling price. Within Christchurch, Harcourts is well known for dominating the market sales and achieving the best possible price for property it sells.
While the overall Christchurch median sale price was recorded at $580,000 for all sales by all companies, Harcourts’ median sale price in June was $637,000. Similarly, the average sale price across all companies was $702,101 while Harcourts’ average sale price was $796,795.
If you are a seller, I urge you to look at the data, take the time to understand what is happening currently in your marketplace, and realise that a quick sale to save a couple of thousand on commission is likely costing you a lot more on the eventual sale price. Our systems, training and strength in the marketplace are designed to achieve the best possible outcome for our sellers, so why would you consider selling with anyone else?