Lack of properties on the market is causing worry among buyers, with Wellington having only seven weeks of supply left, according to the Real Estate Institute of New Zealand’s (REINZ) latest figures released 14th September.
There has been an 18% drop in properties available for sale since last year and the regions which hold around 70% of the national sales volume are looking the worst. Wellington, Otago, Auckland, Waikato/Bay of Plenty and Hawke’s Bay have only 12 weeks or less of supply left.
“The underlying trends indicate that the struggle for stock is the single biggest factor driving market behaviour and price expectations across the country, as we await Spring listings,” says REINZ spokesperson Bryan Thomson.
This is not a good outlook for first home buyers and ironically people who are looking to trade up are reluctant to list their house because they do not feel confident of finding a new house – so it is a vicious cycle.
7 weeks of supply – what does this mean?
In simple terms, if no new houses come on the market, all the existing houses for sale would be sold in 7 weeks!
What can the government do?
In order to tackle this shortage the government need to promote the building of new houses, high density housing and also give incentives for developers to build smaller houses on smaller sections in subdivisions.
Should you build instead?
This can be a good option for first home buyers if your budget allows – there are additional Housing NZ HomeSmart subsidy incentives to help first home buyers who decide to build.
For investors looking for quick gains, they will need to be wary of capital gains tax implications. New builds can be a good ‘build and hold’ option for investors to grow their portfolio and escape Reserve Bank restrictions.
Top three predictions from the lack of supply:
- Even with the Reserve Bank of New Zealand restrictions house prices are probably going to increase.
- People are going to need to borrow more to get into a home.
- You will need to look further out of the city for affordable housing.
Don’t give up – Look in less competitive areas.
If your finances are right and you are ready to buy now don’t be put off by the current market, otherwise the market could get away on you for the short to medium term. Think about looking in areas with less competition, for example, Featherston, Carterton and Upper Hutt have a reasonable amount of land for building.
If you are looking to buy, Be realistic in your expectations – the first home won’t be perfect but it is a step on the ladder. As always, remember to contact us with any questions you may have.