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Action at the Coal-Face

By Chris Gemmell AREINZ

Who would have thought that I would be writing this market insights blog two weeks into a COVID-19 Level 4 lockdown !

Looking around the world, no matter what your political leaning is, thank goodness we are not experiencing the extent of Delta outbreak that many other countries are fighting.

Leading into the lockdown, the North Shore real estate market insights was continuing along a similar pattern to previous months, with a severely depleted volume of property listed on the market for this traditionally slower selling period of the year. This trend started to occur in late summer, where we normally carry more stock through into the winter months of properties that have been through Auction and may not have sold, or stragglers. Not in 2021.

Whilst we have been blessed with a steady number of properties to market and sell at Lochore’s, the wider industry is down around 40%, with a useful barometer of volume is referencing Trademe, one of our largest websites which today shows a mere 871 properties for sale, from Devonport to Albany, Bay’s to Hobsonville.

The net result, as Valuation 101 paper teaches us, is pure economics at play. Reduced supply and steady buyer demand equals price rises over the short to medium term. We are encountering so many first home buyers attending our open homes and auctions whom are highly charged to buy and secure, before interest rates and prices rise beyond their reach. Financial pre-approvals are freshly done, passing the ever-close scrutiny of the Banks, many with sound jobs and savings history. It is a tough journey at present for many.

We are holding online Auctions during lockdown and I just witnessed a property in James Street, in Central Glenfield, sell under the hammer for a healthy sum of $1,455,000, with five registered and keen bidders fighting it out.

Mum and Dad investors in many cases have replaced the traditional long term investor segment, keen as always to help their families enter the market by using equity from their homes. We often manage these properties for them as they rent them in the short term before handing over an early inheritance to their children. A growing trend.

Looking ahead, the supply of properties will no doubt bottle-neck for a month or so, as the backlog being held back from market launch in our lockdown period come on-stream, as well as those that seasonally come on in Spring. This may offer better pickings for some we hope over the next few months and stimulate others to list.

In October the Reserve Bank are signaling stricter rules for lending, with our recommended mortgage broker flat out at present with pre-approvals. Banks are “stress testing” at 5 or 6% interest rates, with very restricted lending of clientele with less than 20% deposit levels. This will take out a line of first home buyers and some investors, potentially slowing the pace of change in the market. It remains to be seen whether the supply needle shifts. Time will tell.

Blog writen by CHRIS GEMMELL, A.R.E.I.N.Z.
Licensed Agent Registered Valuer (non-practising)

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