Market outside of Auckland loses its ‘crazy heat’

Agents in main centres outside of Auckland say the housing market has slowed but is not tanking.

The FOMO (fear of missing out) seen over the last 18 months has disappeared and there are more houses being listed, leading to more choice and less pressure for buyers.

This is not so much a swing to a buyers' market but rather a more even market that's more comparable to pre-Covid times, the agents say.

Other factors playing into the market include higher petrol prices and the Government's relaxation of the CCCFA's "no avocado on toast" rule when it comes to banks approving mortgages, says Nicki Cruickshank, principal for Tommy’s Real Estate in Wellington.

The higher petrol prices, which are likely to stick around for a while, are making people look at properties closer to town, which is helping the apartments market, with multiple offers being made, Cruickshank says.

“I think it's just with the petrol thing people want to be close to town. I think if people can look to save money on transport and stuff that's just another consideration,” she says.

"We're also starting to notice some of the people that went out of the market coming back in because they've relaxed some of those, you know, 'no avocado on toast rules' so we have noticed already a few first home buyers back into the market which is good.”

Cruickshank expects the northern drift of first home buyers up the Kapiti Coast and beyond to continue in the year ahead.

"There's been a lot of growth and a lot of younger people are buying up there because they've been driven out of the city with prices."

Soaring prices at the petrol pump have forced buyers to reconsider their property searches. Photo / Getty Images

Wellington's listings have jumped to the highest level seen since 2012 – that's nearly three times as many as there were late last year, Cruickshank says.

"I think over Wellington City it's something like 930/940, last time I looked, and we were 350 before Christmas."

While prices look to have fallen perhaps 10 per cent, that's still 20 per cent better than a year ago, Cruickshank points out.

Wellington always has a shortage of good family homes, she says, which sell well even if the market is terrible, but more exposed this year are houses with issues – these homes may have sold quickly last year but not so much this year.

"If they are up steps or don't have much sun, or have something wrong with them; before no one cared; now they do."

While the "crazy heat" of the Wellington market has gone, Tommy’s still sold 88 houses out of its city office in February, up about 10 per cent on last February.

In Hamilton, Fraser Coombes, managing director of Ray White Hamilton and Cambridge, also says the frenzy has gone with price falls and says lower buyer appetite.

"The way we're looking at it, is it's back more towards a balanced market, so agents are having to work harder to align purchaser and vendor as opposed to a pretty frantic market where you put the sign up and the phone's running hot and the inbox is pretty busy.

"At the moment it's more of an adjustment between where the purchasers see value and where the vendors see an expectation of their price."

Listings are up in Hamilton, too, with numbers doubling from around 450 last year to around 900 now, he says.

"It's a dramatic increase in the number of properties for sale in Hamilton so it's giving buyers more choice which means the market moves a bit slower as well."

Hamilton vendors who had been sitting on properties are also now realising the peak has been, and people are listing because life continues, Coombes says.

Houses in Hamilton. The city’s housing market is less frantic than it was last year. Photo / Fiona Goodall

"It's people looking to upsize, maybe move to a lifestyle property. We've got people moving for schooling, or my house is too small or the family has grown - just all that normal life progression stuff to be honest."

There's also more stock out there because investors are transitioning in the type of rental properties they want to own.

"What I mean by that is they're selling their older ones and getting into new builds for the tax advantages."

Coombes is pleased to see more first home buyers in the market, though, saying a home at 171 Waite Road in Pirongia sold this week to twin brothers in their 20s.

The twins made a pre-auction offer which brought the auction forward and were able to secure their first home for $893,000.

"Really nice guys, buying it together. Part of their back story is they'd missed out on five properties previously and they wanted to secure a property so the pre-auction offer did it for them."

Coombes expects the review of the CCCFA to boost the market as people are able to access finance a little easier, though that change could still take a bit of time to bed in as banks adjust to the new lending rules.

Now is a great time to buy, he says, with prices down five to 10 per cent on some properties.

"The price range of properties proving a little more difficult to sell are between $800,000 and $1m due to the number of properties competing with each other in this price bracket."

Cameron Bailey, a top seller with Harcourts Papanui in Christchurch, says the market in the southern city has dropped from the "gold rush" of last year to a normal market.

"We were selling houses last year and exceeding vendor expectations, and our expectations a lot of the time, but they've got back into a marketplace where it's a normal market.

44 Glen Oaks Drive, in Northwood, Christchurch, is expected to fetch over $2m at auction. Photo / Supplied

"There's still plenty of buyers out there - there's nothing wrong with this market but it's just probably lost the heat that it had."

With the FOMO gone, people are happy to wait for the right house at the right price.

"People aren't prepared to compromise at the moment and things that were holding us back last year, like construction, lack of flow, all the basics of real estate, are now more important, whereas last year they were happy to compromise on everything because they were scared of missing out.

"This year if you are on a busy road or you've got something with your property that's just not quite right you'll really feel it probably.”

The market is slowing "at a nice pace", however, and Bailey says and that's what it needed.

While he thinks the city will see five to 10 per cent drops, Christchurch could defy the trend as prices are already lower compared to other areas but demand is still strong.

People from Auckland and other regions can pick up a fabulous house for less money than they would pay elsewhere – such as this modern, architecturally-designed four-bedroom house at 44 Glen Oaks Drive, Northwood, which Bailey expects to fetch over $2m when it goes to auction at the end of the month.