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The market over the last 6 months has been impacted by two main themes – high interest rates and high volumes of property for sale, both putting downward pressure on pricing and sales volumes.
The Real Estate Institute’s (REINZ) recent data shows the median house price in Auckland for August was down 4% and the sales count down 6.8% from August 2023. General economic confidence was also weak, with many purchasers feeling uncertain about their future incomes, via business profitability, salary & discretionary income and even job security.
Very recently, spurred on by an OCR reduction, and an almost certain downward trajectory of mortgage rates and wider economic confidence, more purchasers are taking genuine steps to buy property. Open home numbers are up significantly, numbers of bidders are up and so are sales clearance rates. Although, we are yet to see formal data to support it, there is a sense that we’ll achieve some small price growth over the coming months and into 2025. There’s nothing like the sentiment of upwards price growth to stimulate purchaser activity.
To provide some balance to this more positive outlook, the August ANZ Property Report suggests, ‘there is plenty of strong headwinds facing the market, a significant one being sales volume not keeping up with new listings, putting further downward pressure on pricing in the coming months.’ They raise the weakness of broader economic conditions, including unemployment being on the rise.
Ultimately, it will come down to the stimulus of reducing interest rates, versus wider economic factors that might play out.
Moving through the remainder of 2024 we are expecting (and currently experiencing) a normal spring / early summer market, which is characterised by an increase in listings and heightened buyer activity. This buyer activity picked up at the start of September, with listing supply building through October and November. With these factors at play, an increase in sales volume is occurring.
Moving into 2025, with mortgage rate forecasts of early – mid 5% (some even suggesting we could have a sub 5% rate) and improving economic conditions, we expect a positively stable housing market giving confidence to more homeowners to buy and sell. Most property experts and economists are forecasting modest price growth. However, forecasting property conditions, including pricing is not reliable. This time last year, a few economists predicted 5% price growth in 2024, the actual for the 12 months to August 2024 was minus 4%.
Whatever your property plans are for late 2024 and 2025, I encourage you to consider your own specific circumstances and goals, then take advice from various advisors, including a real estate professional early in the process to obtain the best outcome.
Bayleys wishes you all a happy and healthy holiday period and a prosperous 2025.
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Tags: opinion