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The average Rotorua property value dropped nearly $15,000 in the three months to February but a local real estate expert says it’s “the best time ever to upgrade”.
OneRoof’s March report shows the average value is $714,259, a decrease of $14,926 on the previous three months and decrease of $27,296 on the previous 12 but a data analyst says a lack of new stock on the market could put the brakes on value declines.
The only suburbs to increase in the previous three months were Lake Tarawera and Sunnybrook ($31,000 and $14,000 respectively).
In Taupō there was a $9167 increase with 11 of 18 suburbs all increasing in average property value - Hilltop, Kinloch, Kuratau, Mangakino, Motuoapa, Omori, Rainbow Point, Richmond Heights, Tauhara, Two Mile Bay and Wharewaka.
Rotorua Professionals McDowell Real Estate co-owner Steve Lovegrove said there was plenty of aged stock on the market and while prices were falling, “now is the best time ever to upgrade”.
Properties that went to market late last year were likely appraised using sales values from the middle of the year when they were strong, leading to an inflated sense of worth compared to the current market.
Lovegrove said the “very rapid decline of price” was to blame rather than the salesperson or vendor.
He said those with old stock should be having a “frank and brutal discussion” with their salesperson about the real saleable price of the property, and once they had that price, decide how it matched to their motive and objective. If it doesn’t enable a move and they don’t have the motivation or a great need, perhaps sitting out the market is best.
Those motivated or who needed to move should know that while the sale price would be low, so would that of the property they purchase.
“This is the best market to upgrade because the cost will be a lot less,” Lovegrove said.
“Here’s my warning for people waiting for prices to fall further, I don’t think they will. I do not believe any of the economists’ predictions that prices will fall much further than they do now … if anything only slightly, nothing majorly.”
Asked for his reasoning, Lovegrove said it was a mindset people had, not wanting to sell for less than they bought for or less than the rateable value despite it having no bearing on the market value.
“It’s like a barrier. If someone can hang on they will rather than sell.”
Equally, first-home buyers should establish what loan they can service immediately by talking to a mortgage broker.
Rotorua Professionals McDowell Real Estate co-owner Steve Lovegrove. Photo / Andrew Warner
Lovegrove said when reported prices were stabilising or increasing, or that the Reserve Bank wasn’t increasing interest rates, a flurry of people would come out of the woodwork.
“If you wait until everyone else joins the queue, it’s going to be too late.
“In a market that was frenzied say 18 months ago, a property on a busy road, under a pylon or a little less convenient as a quiet culdesac property, they would sell like hotcakes.
“Those properties are harder to sell [now] but if you flip that on the point of view as a buyer, 18 months ago you’d pretty much buy anything. You’d sacrifice your tick list just to get something. Now, as a buyer, fantastic, you can be far more picky.”
REINZ regional director Neville Falconer said owner-occupiers looking for properties at the top end of the market were showing the most interest.
“Salespeople throughout the Bay of Plenty say that this summer has caused much heartache for many people in the North Island and has impacted the entire country to varying degrees. People are now taking a hard look at the vulnerability of their properties in the Bay of Plenty.”
“In Rotorua, the number of people in emergency housing has nearly halved in the past year and there is now more activity in the social housing market.
“Rotorua salespeople say this is positive news for the town and will hopefully attract more buyers soon.”
Data taken from the OneRoof-Valocity House Value Index on February 20 showed house values fell 7.7 per cent in Bay of Plenty since the market peak in February 2022 but the rate of decline was easing.
The 12-month average property value change in Tauranga was -$137,762 and -$98,933 in Western Bay of Plenty.
The data also showed listing volumes were also on a downward trajectory, with the number of new properties listed for sale in February down 25.9 per cent in Bay of Plenty year on year.
Head of valuations at Valocity, OneRoof’s data partner, James Wilson said the lack of new housing stock could put the brakes on value declines.
“Bay of Plenty’s average rate of decline appears to have stalled, as has Nelson’s and Southland’s, but not so lucky are Gisborne and Waikato, where the rate of decline has gathered pace in the last three months.
“Sellers, like buyers, are understandably worried about rising interest rates and will be hesitant about selling in the midst of a downturn.
“The Reserve Bank has warned that monetary conditions will need to tighten further to get inflation back within its target range, and flagged a cash rate peak of 5.5 per cent.”
Valocity head of valuations James Wilson Photo / Fiona Goodall
Wilson said to expect demand to drain from the housing market in the coming months, especially in areas hit hardest by recent extreme weather.
While the shortage of new listings would help prop up values in some areas, the glut of older stock was a concern with buyers likely to see further price declines in areas where there are more homes to choose from.
“Of the 1167 suburbs that recorded 10 or more settled sales in the last 12 months, 84 per cent were down year-on-year, compared to just one suburb a year ago.
“Manui, in Ruapehu, and Glenorchy, in Queenstown-Lakes, are the country’s best-performing suburbs, up 18.4 per cent and 17.7 per cent respectively, while Hutt Central, in Lower Hutt, and Heretaunga, in Upper Hutt, suffered the biggest annual declines, of 30.7 per cent and 29.5 per cent.”
Valocity senior researcher Wayne Shum said first-home buyers managed to increase their share of purchases nationally month-on-month from 41.6 per cent in December to 43.3 per cent in January.
Investors purchasing in January 2023 was up 1.1 per cent on last year at 20.8 per cent.
Shum said interest rates were the “dominant force” in the market and with the Reserve Bank “laser-focused” on tackling inflation, they would be for the months ahead.
“However, the recent lift in the cash rate seems to have been baked into the major retail bank plans.
“There were no corresponding mortgage rate increases at the time of the official cash rate announcement and the fact that some of the main banks have their longer-term rates lower than their shorter-term rates may be a sign that the end of the tightening cycle is near.”
