The Pre-Christmas Opportunity for House Hunters

The Pre-Christmas Opportunity for House Hunters

 

The wind is shifting to a buyer’s market, layer this with the window of opportunity that presents itself every year, the lead up to Christmas, this could be the golden opportunity to secure a great property with far less competition.

 

The Current Market

 

There’s been a pretty sudden wind shift over the last few weeks in the market, that may be spooking some less educated buyers out of the race (for now), but if you know what you’re looking for, you can spot the gust, gybe, and take the opportunity to get ahead of the race. Here are a few reasons why you shouldn’t be taking your summer break from property just yet:

 

Listings are at a record high

A few short weeks ago we were seeing the number of Auckland listings in 7,000s, now we’re seeing a seven-year high number of listings, over 10,000. With more choice, the FOMO (fear-of-missing-out) driven factor of purchases over the last few months has been reducing.

 

The effect of bank policy changes

With the Credit Contracts and Consumer Finance Act (CCCFA) coming into effect this month, and the policy changes banks have been making over the last few months to be able to meet these new regulations, along with changes from the Reserve Bank of New Zealand (RBNZ) have meant less buyers are actually able to buy, despite their willingness to. For example, all main banks, apart from ASB, have stopped (for now) accepting applications for those with less than 20% deposit for anything other than new builds or off the plan purchases, (primarily first home buyers) knocking out a chunk of buyers looking for alternatives to these, who have been more active in the market than they have been in a decade.

 

Rising interest rates

As the OCR increased (and banks anticipating that it would increase) interest rates have jumped up just as fast as they went down. This will have scared some potential buyers into thinking that they will keep rising at this rate and that they wouldn’t be able to afford it if they do. However, we know that banks are using test rates much higher than current interest rates, so the notion that higher interest rates are going to cause homeowners to default on their loans and ultimately cause a crash in the market is extremely unlikely.

On the other side of this coin, is the rising interest rates are also spooking property owners, believing that they better to ‘cash out’ while they’re ahead of the potential further increases, likely contributing to this sudden influx of properties coming to the market over the last couple of weeks. Coupled with the drop in demand (especially with Christmas around the corner), agents will be having conversations about lowering price expectations, as it is just a different market from what it was five weeks ago. Uneducated sellers will likely feel the pressure to drop their expectations to make the sale.

 

The Christmas Influence

It’s the time of year, where we see a sprint to finish projects and wrap up work tasks in time for the summer shut down, even though many businesses are only closed for two weeks. It’s a time of year where we rush for the last-minute gifts, hurry to complete DIY projects in time for the gathering of friends of family that we may have only seen two weeks ago. Yet, there is always this perceived deadline of ‘Christmas’.

Every year we see demand for property drop in the last few weeks leading up to the end of the year as buyers switch focus to other things in their lives, like what they’re going to buy their partner for Christmas and what they’ll be doing New Year’s Eve.

This year is no different, even with the hot market we’ve been seeing. Lucia explains in the Property Investment MasterClass that the property market has cycles within cycles. Over this year we’ve seen huge increases in property prices and demand in the market, but there have been several dips and therefore opportunities to secure a great property for a good price, like with the announcement of the removal of interest deductibility back in March causing hesitation and a pause in the market, an opportunity, as it soon took off again.

Christmas will pass and we’ll get back to normal routines in only a few weeks, and market activity will pick up again, not likely to the excessive increases we’ve seen, but above what it is likely during this pre-Christmas period.

 

Stay focused on your goals

 

If you’ve been out there trying to secure a property and energy is wearing thin as you keep missing out and you’re thinking you can just pick it up again next year, hang in there. Be present at auctions, even if you think they may be out of your budget, you just don’t know whether you could pick up a bargain. So many more properties are passing in, or sellers are reducing their reserve price in the middle of an auction room to get the deal done. If you’re ready to buy don’t miss this window of opportunity!

For more insight into the property market make sure to follow us on YouTube, Facebook and Instagram!

 

“I purchased my property in Pt Chevalier the Friday before Christmas at auction, hardly anybody in the room to bid against where previously I couldn’t even get a bid in…”

Paul Parker 

 

 Watch Paul’s property journey about this purchase in Pt Chevalier for $1.5m, now valued at over $4m in 18 months!


Melanie Evans – Marketing Lead & Property Coach |  support@luciaxiao.co.nz