Few people are out and about buying in Hawkes Bay despite plenty of listings being available, agents report.
Even first home buyers, who agents say the current market conditions are best suited to, are “sitting on their hands” waiting to see if prices drop further.
According to the latest OneRoof-Valocity house price figures, show Hawke's Bay average property value fell 5% ($47,000) to $888,000 on the back of weak market conditions in the region's two biggest centres, Napier and Hastings.
Sales volumes are down and listings are up in both TAs, putting downwards pressure on prices, with Napier’s average property value down 4.7% ($45,000) over the quarter to $904,000, and Hastings' average property value down -5.5% ($56,000) to $958,000.
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The OneRoof figures show house values in more than three quarters of Napier's suburbs are in worse position now than they were six months ago, while house values in almost half of Hastings' suburbs are similarly prone.
Joe Snee, the Hawkes Bay/Gisborne regional manager for Property Brokers, says there’s a stand-off taking place between vendors still hoping to achieve last year’s prices and first home buyers who want prices to fall even more.
“There are still people buying but a very small group. April was a disaster. May sort of bounced back a little bit from a sales perspective.”
Snee says there is a lot more stock on the market in Hawkes Bay, with 900 listings compared to about 300 during the peak when houses were flying out the door.
But first home buyers and investors are not active to the point of hardly existing despite prices being lower.
“We’ve a lot of buyers sitting on their hands waiting for a better deal. Prices have come back a lot and everyone is trying to pick the bottom of the market.”
He says there are first home buyers out looking but they are not putting pen to paper and jumping at houses like they were in the recent past.
“It really is a fear of overpaying at the moment whereas it was a fear of missing out in previous years.”
If interest rates keep climbing, they would be better buying now, he thinks.
Property Brokers has 10 Kingsley Place, in Flaxmere, Hastings, on the market, which Snee says would be an example of a good buy for first home buyers. The three-bedroom, refurbished home is looking for buyers in the $509,000-plus range.
Elanor MacDonald, managing director for Ray White Hawkes Bay, also says a lot of people are sitting on their hands.
This three-bedroom home at 10 Kingsley Place, in Flaxmere, Hastings, is looking for offers of $509,000-plus. Photo / Supplied
A three-bedroom home at 32 Orotu Drive, in Poraiti, Napier, is looking for offers of over $949,000. Photo / Supplied
Although there was good open home attendance last weekend, those numbers are not transferring to lots of offers, she says. “I think these are real waiting to see, ‘if we wait a bit longer the prices might fall further’, type of approaches going on with buyers.”
MacDonald thinks that’s not the best strategy given there has been a sharp correction in the market and there is a good selection of properties on offer.
“Why would you wait until everybody else decides it's the right time to buy is kind of a bad strategy from my point of view if I was a first time buyer.”
But it’s a good sign there are first home buyers looking after getting their pre-approvals for finance, she says.
“They have obviously got hope now - I mean, they just lost hope last year. They got sick of missing out so it's perfect for them, they should be really happy about that.
“Prices have come back from their peaks. If they come back another little bit does it really matter, if you've got a house you like and you can afford?”
Also, with the market quieter first home buyers can put in conditional offers again.
“Last year people were putting in offers without building reports, going cash unconditional to try to get the house and still missing out.”
Being able to make a conditional offer means buyers don’t have to pay for due diligence up front.
“They can get their offer accepted and then go and pay for the builder and the valuer and whatnot, because that was really causing them trouble – that was chewing into their deposits last year terribly.
“Some of them went for 10 houses and didn't get any of them so that could have potentially cost them thousands of dollars out of their deposit. It’s a much nicer, much better market for them.”
A three-bedroom brick home at 48A Pukekura Place, in Taradale, Napier, is seeking offers of over $775,000. Photo / Supplied
43A Arataki Road, in Havelock North, Hastings, is seeking buyer enquiry From $1.229m. Photo / Supplied
MacDonald puts the first home buyer price range between the $750,000 to $900,000 in Hawkes Bay and says that’s a good $100,000 down since the buying frenzy passed.
But while she also says there are adequate listings numbers, she’s not sure if that’s because more people are selling or is simply because homes are not selling as quickly.
“When one would have come on and gone off again last year, it's coming on and it's staying on now.”
She says the clearance rate over the last 12 months for Ray White has fallen: “I’m putting it down to buyers hoping that if they wait they will get a cheaper house.
“That’s the main one, and vendors thinking now is not a good time to sell, ‘I will wait until the market picks up’.”
But there’s slim chances of that happening soon so the strategy is a big gamble if people need to move.
As for buyers, they might find the market is just the same in four months as it is today so they might as have just got on with it, she says.
“I's funny because people wait until other people start buying to start buying, and then they are back in competition again pushing each other's prices up.”
Popular areas to buy in include Havelock North, Napier Hill, anywhere by the water, Taradale, and some parts of central Hastings.
Also very popular are lifestyle blocks close to town. A block further away can go for $1m at the lower end of the scale up to $6m or $7m at the other end.
206A Chatham Road, in Flaxmere, Hastings, is priced at $525,000. Photo / Supplied
A three-bedroom home at 441 Dalcross Street, in Mayfair, Hastings, is priced at $589,000. Photo / Supplied
For the first home buyer range, between $750,000 and $900,000 would buy a nice three-bedroom, fully fenced house with a garage anywhere in Hawkes Bay.
At the top end of that range the house might have a modern kitchen and bathroom and a new paint job.
Ray White is selling 32 Orotu Drive, in Parklands, a relatively newly-built suburb, which MacDonald says is a nice modern home and is good buying at offers over $949,000.
Another home in the first home buyer range is 48A Pukekura Place in Taradale, which MacDonald says is a good suburb with good schools. The three-bedroom brick home is on the market for offers over $775,000.
A more expensive home in Havelock North is also good buying, she says. 43A Arataki Road is on the market from $1.229m.
Simon Tremain, managing partner of Tremain Real Estate, also says listings are good and also described buyers as sitting on their hands.
“My feeling is the market has come down pretty quick based on a bit of panic and a bit of the unknown out there.
“I looked at our April volumes in Hawkes Bay and they were as low as the 2008 October volumes, the GFC level, so that's getting pretty damn low.”
But Tremain thinks the market is at a level now where sales will begin to pick up
“I seriously think people are starting to think there are some good opportunities to buy now and we are starting to see a few more buyers enter the market.
“If you're in a cash position you're in a very good position to buy, and if you're selling you've missed the high of the market.
“The high of the market was November last year - very difficult to pick - but you've missed it, but everyone has still done really well out of the last four to five years so people just need to adjust.
“It's a great market for first home buyers and that's a market we've seen come back significantly in the last six months price wise.”
While no one knows where the market will land Tremain doesn't think prices will get much lower than where they are now.
Homes in the first home buyer range Tremains has for sale include 206A Chatham Road, in Flaxmere, a three-bedroom, one bathroom property on the market for $525,000, and 441 Dalcross Street in Mayfair, a three-bedroom 1960s weatherboard home priced at $589,000.
