Real estate's next challenge: Sellers' expectations

Tuesday, 3 July 2018

The fastest value growth was in Napier and Dunedin where prices were up 3 per cent ovr the quarter

New Zealand's real estate industry is dealing with challenges as it works to manage sellers' expectations on sales prices.

QV has released its latest data, which shows New Zealand values were down 0.3 per cent over the past three months, to a national average value of $675,680. Values went backwards over the quarter in five regions.

Mid-last year, nationwide values rose 1.2 per cent over the same three months.

The fastest value growth was in Napier and Dunedin where prices were up 3 per cent over the quarter, and the biggest slowdown was seen in Tauranga, where values fell 0.9 per cent. On an annual basis, Dunedin had the most value growth of the main centres, up 9.2 per cent.

That was followed by Wellington, up 4.8 per cent on June 2017.

QV general manager David Nagel said, after a long period of value growth, some sellers had an inflated or unrealistic view of the value of their properties.

* How a real estate agent convinces house sellers to face reality and accept a lower price**

'This is resulting in slower-than-usual average time to sell properties across some areas.'

He said it was a buyers' market in some ways. Loan-to-value restrictions had dented investor demand and reduced competition for properties, so buyers had time to do their due diligence.

'As a result, regions such as Auckland are seeing an increasing number of sales through negotiation as opposed to auction as vendors show more flexibility in order to sell their property in a less buoyant market,' he said.

Martin Dunn, of real estate agency City Sales, said he faced a challenge in dealing with vendors' expectation. 'So much of particularly the apartment market is sentiment-based and attitudes can change overnight.'

Martin Dunn has encountered vendors with unrealistic expectations of what their properties might sell for.

QV Auckland senior consultant James Steele said there was always a period after a change in the market where it took time for vendors' expectations to adjust to a period of more stable prices.

But he said, with unemployment still low and the economy strong, there was little reason to force sellers' hands.

He said homes that were well-presented, in sought-after areas, were still selling well – but were not getting the price premium they might have In 2016.

Economist Gareth Kiernan, of Infometrics, agreed sellers could pull their properties from the market rather than sell for a price that was less than they wanted. 'Sales volumes have been fairly steady for the last six to 12 months.'

Nagel said there was a lot of activity in the property market nationwide.

'A great example of this is in Christchurch, where infrastructure improvements in the city appear to be contributing to demand for new builds in the CBD. With many positive city projects currently on the go, we may continue to see increased demand for city centre property in the coming months.'

'The growth of suburbs on the outskirts of our main cities continues. With high values remaining in most of our cities, more affordable suburbs on the outskirts continue to appeal particularly to first home buyers. This is a common theme across Auckland, Tauranga and Wellington in particular.'

One real estate agent who did not want to be identified said more sellers were opting for private sales, and were facing challenges to find a buyer willing to pay what they wanted.