Could now be an ideal time to buy property?

First home buyers increasingly active, REINZ reports

Could now be an ideal time to buy property?

Although property transactions slowed leading up to the New Zealand election, the market is busier than a year ago, a sign that confidence has increased, the Real Estate Institute of New Zealand says.

With property prices having come off record highs and interest rates being at or near the peak, real estate agents are reporting that first home buyers are becoming increasingly active.

REINZ CEO Jen Baird (pictured above) told NZ Adviser that seasonally adjusted figures for October showed a pause in market activity leading up to the 2023 New Zealand election. Baird said that sales numbers were not in line with a typical September to October period.

“That said, it’s been a busier month than a year ago … that says to me that there is more activity and more confidence in the market in general,” Baird said.

According to the REINZ Monthly Property Report for October, the national median selling price remained flat at $795,000 (down 2.8% year-on-year), with properties taking a median of 37 days to sell. The number of properties sold reached 5,619 (down 2.5% month-on-month, up 8% year-on-year), with 12 of 16 regions showing an increase in the number of properties sold.

The median selling price in Auckland was $1,040,000 (down 3.6% year-on-year), properties taking a median of 36 days to sell, in line with the 10-year average for October. The median selling price in Wellington was $795,000 (down 4.6% year-on-year), $680,000 in Canterbury (up 3.2%) and $670,000 in Otago (down 1.5%).

More property market certainty evident, says REINZ

Baird acknowledged that following a period of change, Kiwis could move forward with greater certainty, forecasts showing interest rates are close to or at the top of the current hiking cycle, and with the formation of new Government underway.

“When people know what they’re dealing with, this really helps from an activity perspective in the property market,” Baird said.

REINZ data shows increased supply coming to property market

REINZ reported 9,529 new listings in October, up 2.6% year-on-year, with every region showing an increase in new listings month-on-month.

Baird said that the increasing number of property listings showed a “slow but marked improvement” to the last year and a renewed confidence from property owners looking to sell.

“While details of the new government are still being discussed among coalition partners, many vendors and buyers are showing confidence that it’s a better time to sell now and a good time to buy. The signs are there for an improving market,” Baird said.

Commenting on the balance between supply and demand, Baird told NZ Adviser that while listings had paused in the lead-up to the election, more listings were starting to come onto the market.

“The listing numbers aren’t where they were even a year ago, but everything I’m hearing is that there are a lot of conversations happening with real estate agents from people making decisions to bring properties to market in the short-term,” she said.

Buyer activity has increased through the early part of spring, and real estate agents throughout the country are reporting higher attendance at open homes.

First home buyers active in market

Baird said that first home buyers in particular had decided that the bottom of the market had been reached and that from a pricing perspective, it was now a good time to get in.

“We’re still seeing a lot of first home buyers in the market really looking to take advantage of prices that are starting to edge northwards,” she said.

REINZ said in its October report that first home buyers were the most active buyer group across most of Auckland, a trend Baird said had been the case for several months, acknowledging this was partly due to an absence of investors.

“While interest rates are not as favourable as they were 18 months ago, from a pure price perspective, prices have come back fairly considerably,” Baird said.

Noting that the Reserve Bank had indicated that at 5.50%, the official cash rate is at or near the peak for this cycle, Baird said that now could be considered a good time to buy.

“When you start thinking about the fact that they’re starting to nudge upwards again, if you’re a first home buyer, now might be your best chance to buy at a price that you can afford,” she said.

REINZ October data showed significant decreases in median selling prices for Nelson and Marlborough, down 13.3% and 16.8% year-on-year, at $670,500 and $650,000, respectively.

Commenting on the figures, Baird said that smaller sample sizes for these regions could cause the figures to fluctuate, noting that 39 properties were sold in Nelson, and 60 in Marlborough over the October month.

The REINZ House Price Index (HPI), which measures the changing value of residential property nationwide, showed an annual decrease of 2.5%, but had increased by 1.1% compared to the previous month, to 3652.

REINZ said that the average annual growth in the New Zealand HPI over the past five years was 5.8%, and that the HPI remained 14.6% below the peak of the market in 2021.

Are you seeing increased demand for mortgages from first home buyers? Share your thoughts in the comments section below.