Where to find a bargain in the current housing market
It’s old news that New Zealand’s housing market has turned a corner, with the supply of properties for sale in Lower Hutt having quadrupled from what was available 12 months ago. The market change has been much faster than most expected but so was the momentum that led up to the present, where prices increased 45% in just two years.
The rise in interest costs has increased the cost to service loans and lending rules have made the process slower for buyers. We are in a transitioning market where purchasers can’t borrow as much as they could six months ago, and sellers are adjusting their expectations from where their home’s value had climbed to. We are still seeing an occasional home sell against the downward market trend. There is always an exception; a buyer who has reason to see more value in a particular property, a property with appeal which attracts competition between buyers, a buyer with cash who is more focussed on getting what they want than the price they pay. The market still has plenty of buyers but most of them just have less purchasing power.
In the months up to 30 April 2022 the median sale price in Lower Hutt came back -7.1%, confirming the adjustment we are seeing in asking prices. The national stats which are reporting a -3% drop, don’t match the reality seen here in Lower Hutt. There were 98 sales in Lower Hutt in April 2022, a 34% drop in volume from the 150 in April 2021. There are over 900 homes on the market (including new builds), and the median Lower Hutt price in April was $847,000.
For those buyers looking for a bargain in this market, you might find one if you ask the right questions. It is worth visiting open homes and chatting to the agent, they may be able to say more in that environment than they will by email or phone. The asking price doesn’t always reflect what the vendor will take, and of course why talk price until you know for sure you like the home. Your agent is there to get the vendor the best price, and you don’t want to insult the seller, but it is worth understanding their motivation. If a seller knows you love their home, you might be pleasantly surprised how willing they are to consider selling at the price you can afford.
This is the market buyers hope for, so get out and see what’s on offer. Look in suburbs you haven’t considered. The most recent median price in each suburb could be your starting point but allow for that to have changed. In Lower Hutt the current median value in Woburn ($1,427,700), Central Hutt ($1,302,700), Tirohanga ($1,221,200), and Korokoro ($1,213,900) indicates they are the more expensive suburbs in the Hutt Valley. Among the cheaper suburbs are Moera ($764,300), Wainuiomata ($773,150), Naenae ($812,450) and Stokes Valley ($811,250).
There are more opportunities in a quiet market, but this can change faster than you realise. Right now, some homes are undervalued just because of the volume of homes for sale. In previous similar markets we have seen some of these owners give up and stay put or rent their home. As properties are withdrawn or sold, they are not always replaced by as many new and motivated sellers. The competition between sellers will change and we will go into a balanced market.
Right now, the market is like a retail store having a “sale”, even though there is no “end date”, it will come to an end and prices will either flatten out or go up.