Lifestyle

The market is dropping: Should I buy now, and can I get a bargain?


New Zealand house prices are still sky-high, but the tide is turning.

ANZ bank economists are now predicting a 10% decline in house prices this year, up from January’s forecast of a 7% fall.

Of course, interest rates are rising at the same time, so homeownership is still no walk in the park.

We asked the experts, and those househunting, whether it’s a good time to buy right now, and if so, how homebuyers can get the best deal in this kind of market.

READ MORE:
* Is it the right time to buy your first house?
* I lost money on a house, here’s what you can learn from that
* REINZ: Big slump in turnover, Auckland house sales down by a third

Stuart Wills, of Mortgage Managers, says prices tend to rise if you hold onto a house for a decade or more.

Supplied

Stuart Wills, of Mortgage Managers, says prices tend to rise if you hold onto a house for a decade or more.

Mortgage broker Stuart Wills, of Mortgage Managers

Wills has been in the business since 1997 and says he’s seen the market go up and down in that time, although generally over a 10-year period, it has always risen.

Is it a good time to buy?

It depends on the situation. Over time the market has always gone up. If I was a first home buyer, I wouldn’t have any qualms about buying now. Yes, the prices could drop further, but in five or 10 years, they will have risen.

Rents are going up too. The good thing about buying a house is you’re more in control of your own destiny. They can’t put the rent up, or require you to move. Whereas if you buy a property you can fix it for a decent time, quantify what the payments are.

What strategies should home buyers employ in this market to get a bargain?

The key things is that buyers have more time to make a more considered decision. Whereas six months ago, people were buying without checking properly, now you can take more time.

Other buyers can also work on their “account conduct issues”. If they’ve been a bit wild and bought rubbish, now is a good time to sit back and tidy that up.

They may also be able to sell something like a boat to raise more of a deposit. They have the time to do that when previously, they didn’t: Houses were being snapped up really quickly and often with three or four buyers.

Buyers can also negotiate conditions. For example, I have a client at the moment trying to get a five-week settlement.

REINZ chief executive Jen Baird says the market is shifting to favour buyers but that might be countered by increases to the official cash rate and tighter lending criteria.

Supplied

REINZ chief executive Jen Baird says the market is shifting to favour buyers but that might be countered by increases to the official cash rate and tighter lending criteria.

Real Estate Institute of New Zealand Chief Executive Jen Baird

Is it a good time to buy?

People are motivated to buy and sell a property for different reasons.

For those who are ready to upsize, downsize, make a lifestyle change, or start a family, now is the right time to look to buy a new home.

Are people going to get a bargain in the current market, and how should they try to?

Looking at REINZ’s March figures, what we’re seeing is that stock levels are up, sales are taking a little longer and there is less urgency in the market – which means buyers have more choice and time to make the right decisions for them.

As that demand-side pressure eases, so too does upward pressure on prices and the figures suggest that we are shifting to a market that favours buyers.

That said, increases to the official cash rate – up 50 basis points on April 13, and with an outlook of further increases – tighter lending criteria, and prices that are still 7.9% on this time last year will moderate buyer demand.

Gemma Ellis and Shavhan Harris plan to buy a house in Invercargill within six months, planning to spend between $300,000 and $400,000 for a three-bedroom place.

Supplied

Gemma Ellis and Shavhan Harris plan to buy a house in Invercargill within six months, planning to spend between $300,000 and $400,000 for a three-bedroom place.

First home buyer Gemma Ellis

Ellis, an accounting student and partner Shavhan Harris, a builder, are looking to buy a home costing up to $400,000 in Invercargill this year.

With house prices dropping, is it a good time for you to buy?

What I’ve learned from accounting is the main concern is a significant change in the local environment.

For Invercargill, this change would be Tiwai Point closing as people would lose their jobs and move to places with other work, potentially flooding the housing market and dropping prices.

Gemma Ellis says there are many homes on the market in Invercargill between $300,000 and $400,000. This three-bedroom house in Strathern is for sale by "buyer enquiry over" $319,000.

Supplied

Gemma Ellis says there are many homes on the market in Invercargill between $300,000 and $400,000. This three-bedroom house in Strathern is for sale by “buyer enquiry over” $319,000.

So, for us, the local market matters more than the national market.

We also decided to buy now as we have a new mall is being built which is due to finish and open by the end of next year. This will mean an increase in jobs and more people moving to fill those positions, so prices will rise. We wanted to get in before this.

So in short, yes, it’s still a good time for us because of these local changes, especially since the bank we’re going with has fixed rates.

Would you advise other first home buyers to wait to see if prices drop more to try to get a bargain?

No, I would tell them to look at their local economy and if there are any large changes looming that would affect the need or want for housing.

I’d also pay attention to legislation changes, like limits on rental properties and capital gains tax. Basically, learn some economics and understand the changes.

If you get pre-approval and want to wait, then you’re in a better position to jump when it happens.

This Kāinga Ora social housing development in Rangiora, by Rohan Collett Architects, has won a Housing – Multi Unit award. (Video first published March 2022)

Do you wish you had bought 18 months ago?

We weren’t together then, so we didn’t have an opportunity to buy as it’s near impossible to do it alone.

We have a good understanding and trust of each other, but we’re still going to do a pre-nup because we both know that sometimes it hits the fan.



Source link

Leave a Reply

Your email address will not be published.