At the start of the year, the Real Estate Institute published its December stats and at the same time they also did a wrap up of the market analysis for 2017.
There were no great surprises. Prices in Auckland rose a modest 1.8% to a median of $870,000 but volumes were down 26% compared with 2016, indicating a dip in vendor confidence but not the major market retraction that some had forecast.
The slower market yet rising prices was driven by inventory; demand was weaker and supply weaker still so the pressure on price continued, albeit with fewer buyers and sellers. Properties sold and for strong prices, just not as many of them as before.
In terms of 2018, we’re expecting business as usual. We’ve had an unusually busy start to the year in terms of appraisal enquiries from vendors and this is a continuation of a trend that started at the back end of last year. Throughout 2017 there was a sense that there was a pent up bulge in the pipeline of buyers and sellers which would release itself at some point, just not with a mad rush, and this could be the start of that process.
Today’s market sees buyers (under the guidance of their banks and brokers) doing greater levels of diligence before jumping in which is putting greater pressure on vendors to disclose accurate data about their property and get the basic repairs and maintenance complete before selling. The fewer additional disclosures you have to provide as a vendor, the easier your sale will be and we don’t see this trend changing. For vendors, value is now just as likely to be added by fixing up a defective title as it is by replacing the kitchen and for buyers, in a steadier market the pressure to create a return on investment is at the time of purchase rather than on sale.
After diligence and disclosure, the third ‘d’ is data and this is another trend that will shape the market moving forwards. We seem to get fewer enquiries from buyers about value when they’re looking at a property which is not marked with a price and this is presumably because they’re looking at the online valuation tools like Homes.co.nz and TradeMe Property Insights and forming their own point of view instead.
For vendors, I reckon the conclusion to draw from this is that the focus is on presenting properties exquisitely well and creating an un-missable product for buyers that overcomes the inertia from buyers. For industry folk, the focus is on understanding where buyers come from so that we can create efficient marketing campaigns that deliver meaningful exposure to the right buyers and creating a better service experience along the way.