Property vendors lower expectations

The asking prices that people selling the 51,980 homes on the market hope for has fallen nationwide for the first time since January, according to the latest report from property listings website realestate.co.nz.

At the start of the year the average asking price for a residential property was $405,040. It rose to $422,648 in March and stayed around there during April. But in May it plummeted back down to $407,349.

Realestate.co.nz chief executive Alistair Helm surmises the drop is a result of sellers hoping to attract more buyers.

“The volume of property on the market has been steadily rising over the past several months and something had to give,” Mr Helm said.

“Sellers with new listings recognise the need to be aggressive on price with the large volume of property available. Accordingly, they’ve lowered asking prices in reaction to market conditions.”

While the current asking price is 5% below the October 2007 peak, it is up 1.5% from May last year.

BNZ chief economist Tony Alexander picked last week that house prices are going to rise after a result of changes announced in the budget, this is not likely to take effect until changes announced in the budget are implemented from October. He added that landlords should be raising rent.

“I see that a survey of 2,459 landlords has found just under half say they plan raising rents as a result of the Budget. My first response to that is that the over 50% planning to leave them unchanged illustrates quite well the lack of business nouse amongst average Kiwis,” Mr Alexander said.

“Given what is going to be a worsening imbalance at current prices between the supply of and demand for rental property, failing to raise rents will not only deny them easy income, it will prevent the very market response needed to ensure housing supply responds to the imbalance.”

Despite the drop in the national average asking price, Mr Helm said there had not been a flood of cheap prices hitting the market yet.

“While we’ve not seen a deluge of cheap property for sale, it does appear that we’ve peaked on price and there’s an opportunity here for buyers. Sellers are hunting them out using price as leverage to beat the competition,” Mr Helm said.

The average price in Auckland at May, compared to the three months prior, was $518,853. In Wellington they were virtually unchanged at $445,408. In Caterbury prices fell 1% to a $358,856 average, and in the Central Otago/Lakes district they dropped 3.4% to $523,760.

Northland experienced the biggest drop, going down 8.3% to $371,098, while Coromandel prices fell to $389,937 and Nelson prices dropped 5.9% to $392,161.

The biggest rise in price was on the West Coast, up 8.9% to $273,797. In Wairarapa prices were up 5.7% to $294,768 and in Waikato prices rose 1.3% to $368,750.