There is an extreme shortage of real estate for sale in the Wellington area and understandably, buyers are becoming frustrated by the severe lack of choice out there. Current listing inventory is approx 30-40% of what it was in February / March. One of the consequences of this is increased competition for the few homes that do come on the market, a few weeks ago we had 19 buyers offer on a solid 3 bedroom home at 24 Colchester Cres, Newlands. This is the largest number of offers I have seen on a Northern Suburbs property in over 8 years working in this area. It set a new record for our office.
So what is causing this shortage?
1. Low interest rates
Historically low interest rates make mortgages much more affordable, attracting more buyers into the market but it also means that many owners can afford to buy a new home without selling their existing one. People are keeping their 3 bedroom home in Newlands / Johnsonville as a rental and becoming property investors rather than property sellers.
2. Property prices could be set to rise
Many owners believe that property prices will continue to rise following what we have seen in Auckland and Christchurch. I believe this is a fair assumption right now after 7 years of steady recovery since the peak of our last boom in 2007. The only problem is that while your property value is going up, the value of the bigger / nicer property you are going to move to is also going up, and the gap between the two keeps getting wider and wider in a rising market.
3. Winter weather and school holidays
Everyone believes their home looks better in Summer, especially Wellingtonians. Most home owners also like to present their property as well as possible, getting all those little maintenance jobs done before going on the market. The colder weather in Winter makes it extremely hard to work up the motivation to get outside and work on the garden, and most of the time it’s too wet anyway! So everything goes on hold until Spring. School holidays also have a big effect on the market. We notice the number of appraisal requests increase dramatically at the end of each set of holidays. Owners find it hard to focus on getting a house ready for sale when they are too busy trying to keep little ones occupied in cold weather (a full time job all on it’s own).
4. People think Winter is a bad time to sell
While this may be true in some seasonal markets (think Taupo, the Coromandel etc) it couldn’t be further from the truth in Wellington. It is a very common misconception. No matter how many times I tell people: “Houses that sell in Winter get great prices.” They just don’t seem to believe me. While it may be colder and the sun doesn’t come out as often, as a seller you have so little competition from other houses on the market. This means the buyers are focused on your home and it greatly increases your chance of seeing multiple offers. The buyers are out in force with low interest rates, kiwisaver deposit contributions, and 5 years of pent up demand now surfacing after years of waiting for the right time to buy.
THOUGHT OF THE WEEK:
‘The work you do while you procrastinate is probably the work you should be doing for the rest of your life’
– Jessica Hische