As real estate agencies record monthly sales of more than $1 billion and properties fly past rating valuations and agent expectations, the challenge both vendors and buyers face is keeping up with a fast-moving market.
Normally valuations based on nearby sales from more than a month ago would be considered a good enough gauge of where a property sits in the market, but not anymore.
Ray White Manurewa agent Pat Lapalapa says prices in his South Auckland patch change on a weekly basis.
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“Most systems get updated four weeks later but at that rate we can’t keep up [with recent sales]. It’s been difficult for valuers and I'm sure they are having bit of an issue trying to keep up with statistics,” he says.
Lapalapa says he gets calls “left, right and centre” from valuers asking about recent sales and buyer feedback to try and get the most accurate figures.
“Some of my colleagues have had valuations and they struggle to stack it up as it has not come back to the same price that the buyers are paying,” Lapalapa says.
Valuers and agents are struggling to keep up with rising prices – as are buyers.
For example, if a property is valued at $750,000 and subsequently sells at auction for $850,000, buyers who didn’t have mortgage approval to bid beyond $800,000 would miss out.
Valuer Steve Hollings, who assesses properties in South and West Auckland, says it’s not easy in the current housing market but he’s managing.
Homes that were in the sub-$1 million bracket have increased in value by about 10 percent in recent months while homes in the $1 million-plus bracket are also “firming up”, he says.
“The market has moved and you have to be on the ball, because even in the last six weeks it’s changed a lot and the confidence is back.”
Mortgage Lab owner Rupert Gough, says he works according to the bank policy, where valuations are based on sales dating back three to six months.
However, those figures are often out of date, he says.
“It was before the lockdown and it was a whole world away. These days a month is a big amount of time in terms of valuations.”
Gough says there are waves of people looking to buy now, with many Kiwis feeling reasonably confident about the job market.
Getting finances approval, though, is taking longer - what used to be a two or three-day process before Covid-19 can now extend to ten days.
“A big frustration is that banks are taking too long to process applications in a world where deadlines are really important,” he says.
“People want to put an offer or go to an auction but banks are just struggling to process.”
Low interest rates have helped to create enthusiasm among buyers, and it’s likely they’ll drop even further.
ASB senior economist Mike Jones says: “There’s probably a good chance we’ll see mortgage rates continuing to grind down in the next six months and it’ll boost the housing market even further.”
The Reserve Bank is talking about implementing negative interest rates, which will affect New Zealand economy too, if implemented.
“Even just the speculation that negative rates will arrive to our shores is leading to lower interest rates in general,” Jones says.
At the start of the Covid crisis, the forecast was house prices would fall, yet they haven’t and are expected to strengthen in the near future.
“[The market has] certainly defied predictions of declining prices.”
