ANALYSIS: Winter is fast approaching, and some buyers are likely to be asking themselves if they can get a better deal by holding off their purchase till June or July.
The common assumption in New Zealand is that winter months are quieter for the housing market. The thinking is that wind, cold and rain will lead to fewer people at open homes and fewer homes on the market.
For some, that means vendors are under pressure and buyers can negotiate a good price for their future home.
But what does the data say? Is winter the optimum season for scoring property bargain?
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It is true that the housing market tends to be sluggish over winter, but figures show real estate’s quietest months, at least when it comes to house price growth, are actually in summer and autumn.
That hot weather doesn’t necessarily mean a hot property market. So for buyers, the best months in which to negotiate on price are December and January, then April and May.
The slowdown in price growth isn’t so much about the weather but rather holidays.
December, January, and April are inconvenient times when looking for houses. In December and January, we’re all thinking about Christmas and New Year and school breaks.
April usually has a number of public holidays (Easter and Anzac Day) and another school break, which tend to put property shopping on the back burner.
We see this in the property sales data. Fewer properties sell over the Christmas period. Then, there is a noticeable fall in property transactions in April. So, as a buyer, you might find some sellers are more willing to negotiate a good purchase price as sales dip.
The traditional advice appears to be more of an urban myth: cooler weather doesn’t necessarily mean cooler property prices.
But it’s also important to point out that while property prices are likely to be softer in these parts of the year, that doesn’t mean house prices always go down.
For example, property prices are most likely to go down in January. But over the last 32 Januarys, house prices only fell 50% of the time. The other half of the time, property prices still went up that month.
On the other hand, house prices are less likely to fall in February and September. But they still fell 9% and 12.5% over the last 30-plus years, respectively.
So while the data suggests January, December, April, and May are the most favourable months for negotiating on price, that doesn’t mean that buyers should bank on prices always dropping during those months.
So, should you wait until winter to buy a property? While you might not always land a cheaper price, the market will be quieter. That could give you the breathing room to find the right property and a tad more leverage to negotiate the right deal.
But the data suggests you’ll have even better luck in months with lots of public (and school) holidays.
If you’re thinking about selling, generally, it’s the opposite. Prices heat up in February and March and then again in September, October and November. So, getting your house ready for sale in winter to hit the warmer spring market could be the right move to consider.
- Ed McKnight is the resident economist at property investment company Opes Partners
