A new survey by ASB has shown that house price expectations are at a five-and-a-half-year low. People have noticed a change in the housing market, and are expecting prices to match the slow down that saw prices drop across the country by 0.7% in July.
This isn’t entirely unexpected with an election around the corner, but it has prompted buyers and homeowners to make the best of what they can afford.
Demand remains high in Kapiti, but there is still a shortage of new listings. Likely caused by potential sellers finding it difficult to identify a new house to trade up to and choosing to hold onto their own homes instead.
Homeowners are choosing to renovate and add value to their existing home instead of taking the next step on the housing ladder. As long as you can afford the new debt and aren’t over capitalising on your renovations, it’s an excellent way to get ahead.
Even if you aren’t wanting to sell immediately after renovating, it can be a smart way to make gains in the housing market without going through the potential pain of getting bridging finance, or potentially even selling your home and having nowhere to go. Adding new kitchens, bathrooms and extensions can be a cost-effective way to add value and equity to your home and make it feel like a new home.
New buyers are also making the current conditions work for them with a shift towards purchasing smaller homes. According to Trade Me, in the last twelve months, demand for one or two bedroom homes in Wellington has pushed the average local value to $412,400.
While most buyers would prefer to buy a home with three plus bedrooms, many have no choice but to look at smaller homes depending on their budget or location. It’s still a rung on the property ladder and will allow them more leverage when it comes to moving up.
Of course, controlling most of the moves in the housing markets are interest rates. It’s easy to forget how high they were even ten years ago, but uncertainty about who will govern the country after September 23 can make buyers jittery.
Our advice is that this is out of your control—but you can control the decisions you make about loan structures and how to spread risk by seeking advice from a trusted mortgage adviser. If you’re unsure about your next move in the property market get in touch, we’re here to help you make the most of the current market conditions and plan for the future.