In the real estate industry we like to comment in a positive way about the market. We want to give confidence to our sellers that they will achieve great prices for their homes. Being a premium brand, we at New Zealand Sotheby’s International Realty, temper this with a realistic and educated view based on expert opinions as well as what we see at the coal face of the real estate market.
With that in mind, we have been talking about the gradual lift in the market for a few months now.
And it is coming. However, it is slow to come. Real Estate Institute of New Zealand median price stats that are realeased monthly show a rather steady, yet flat-ish trend for Hawke’s Bay over the last 13 months.
Year on year the region is down 1% compared to January last year and down 7.6% compared to December. This last figure is skewed by a traditionally slow January where sales volumes lessen due to the holiday period. The latter half of the year was certainly showing an upward trend with December’s median the high for the year.
The latest OCR announcement on 19 February dropped the rate from 4.25% to 3.75%, that is certainly good news for home owners and those looking to become home owners. The Reserve Bank also indicated that further rate cuts will follow more quickly than was previously expected.
Economist Tony Alexander and CoreLogic Chief Property Economist Kelvin Davidson both predict in the media that the OCR will reach just above 3% later this year rather than in 2026 as was previously the prediction. This will lead to reduced mortgage rates as we have already seen since this announcement. A 4.99% rate briefly appeared on offer at Westpac, although this has since changed at the time of writing.
However a sub 5% rate is certainly likely in the near future (perhaps by the time this article goes to print). Property purchases then become more affordable to service and buyers have more confidence going into the auction room or to the negotiation table. The Reserve Bank has also reported that 90% of mortgages are currently being fixed for six to 12 months.
As interest rates decrease, this trend is expected to shift towards longer terms, providing buyers with greater confidence and enabling them to plan over years, rather than months.
In our Hawke’s Bay office and in our wider group of central North Island offices we are certainly seeing an increase in the number of listings coming on from sellers and buyers are attending open homes in greater volumes – all positive news.
Realestate.co.nz’s Sarah Wood comments that “The number of active users on the site in January was up by nearly 12% from the same time last year, and the cut [OCR] should help that momentum continue.” Adrian Orr and the government have stated, perhaps unsurprisingly, that the economic outlook is positive which adds weight to a positive outlook for house prices in general.
At Sotheby’s, we predict a stable market, one where significant fluctuations are unlikely. House prices are becoming relatively more affordable compared to recent years, and modest capital gains are once again expected for properties held over the long term.
Sabine Davison is an award-winning real estate professional with over two decades of experience across New Zealand. As General Manager of New Zealand Southeby’s International Realty in the central North Island, she leads strategy and growth while driving excellence in sales, coaching, and auctioneering.
