There are signs of a housing market slowdown, with CoreLogic data showing median house values have fallen in 150 out of 900 suburbs around the country in the last three months.
The slowdown has been brought on by changes to lending rules and mortgage rate increases but despite this, house prices are at the highest level they have ever been relative to incomes, meaning it is still tough for those trying to enter the market.
After a two-year search, first home buyers Stephen Pipe and his wife, Jessica, have managed to buy a house in Bombay – on the cusp of Auckland.
They wanted somewhere with a bit of land and enough room for Pipe, who is a strength and conditioning coach, to set up a high performance gym.
“This was about the fifth property that we put an offer in on and when it came up literally on the day of the first open home, we had the sales and purchase agreement printed off. We had a strong feeling we knew it was going to be the one.
“We went to the open home, we liked it, we made an offer there on the spot and that evening we got the property.”
He said the market was competitive and they felt pressure to put an offer in as soon as they could. Over the two years they spent house hunting, the market changed considerably.
“We continually felt like every time we made an offer and it wasn’t accepted, something better came up and I feel like that’s the trend that we’re getting into now. We are truly getting into a buyers’ market.
“Sellers are actually starting to get a little bit more desperate, all of a sudden they’re realising, damn, I kind of missed the boat.”
The couple will move into their home after Easter and Pipe said it still feels both amazing and surreal.
While there was talk of the housing market taking a dip, Pipe said that could be a good thing for some.
“If someone owns a whole stack of properties when the market corrects it actually gives a whole stack of other people opportunity to get in.
“They might be over leveraged, maybe they had too many properties or need to sell so it gives first time buyers a big opportunity.”
Not so many auctions
The First Home Buyers Club director Lesley Harris said there are signs the market is flattening out, but the sector would be unlikely to see a drastic drop, due to the huge demand for housing.
“There’s still a bit of a lack of stock, but what we are seeing is not quite so much competition for each house and a few more properties by negotiation and by fixed price. So that trend of everything going to auction and selling at auction seems to be changing slightly, which of course, is excellent for first home buyers.”
CoreLogic chief property economist Kelvin Davidson said this year was looking to be quieter than last, with reduced sales volumes, longer periods to sell, reduced price pressures and tighter mortgage volumes.
“In many parts of the country, buyers have more choice and so they’re taking their time, they’re not necessarily offering straight away.
“Vendors are waiting for those offers to come in and even when a buyer does offer, it could be that they’re offering below what the vendor would like and it takes a while to meet in the middle.”
ANZ senior economist Miles Workman said the slowdown comes after exceptionally strong growth during the post-pandemic period.
“Certainly, the worm has turned, we’re seeing house prices begin to fall so from the peak in around November last year, house prices nationwide are down about two-and-a-half percent. We expect further deterioration, with prices falling around about 10 percent over 2022.”
He said data from the last few decades shows house prices are at the highest they have ever been relative to incomes.
“When house prices fall, provided incomes don’t fall as well, which we’re not expecting, we’re still expecting relatively solid nominal income growth, then house prices should become more affordable.”
However, Workman said a turn in the housing market tended to result in a change in business and consumer sentiment, which could have broader economic implications.