QV operations manager James Wilson says most areas that have experienced positive value growth or held relatively steady over the past quarter have had average values of well below $1 million – in other words, “first home buyer territory”.
This backs up claims from mortgage adviser firms that there have been more inquiries from first home buyers over the past six weeks.
Tauranga QV property consultant Derek Turnwald says there are early signs of a shift in market sentiment.
“First-home buyers and ‘hand sitters’ who have been in a position to buy or sell but have patiently waited for stability in the market are starting to show some interest now.
“Even investors are becoming increasingly active – but many others will be waiting to see what this year’s election result will be.”
In the meantime, he says building net migration will create significant new demand for residential property – especially in larger centres, including Tauranga.
Turnwald says in Rotorua, first home buyers are realising the market is reaching the end of a decline and are showing stronger interest, while in Wellington they have little competition from investors, which combined with a slight easing of bank lending criteria, is providing a relatively good opportunity to enter the market.
The latest QV House Price Index shows home values decreased by 3.4% nationally over the three months to the end of May 2023 – a slight improvement on the 3.5% quarterly reduction in April and the 3.9% quarterly reduction in March – with the average value now sitting at $888,930. That figure is 13.7% lower than the same time last year and 20.2% higher than its pre-Covid-19 level.
While investors haven’t removed themselves, Wilson says they have continued to adopt a wait-and-see approach in many markets.
“However, indications the OCR has peaked could entice them back, with valuers and real estate agents at the ‘coal face’ of the market already reporting a small uptick in interest,” Wilson says.
Meanwhile, he says there remains a high level of uncertainty overall.
“There’s a generally cautious mindset out there, especially among many ‘mum and dad’ buyer types.
“While these buyers remain inactive, value levels in areas that used to be strong are likely to remain pretty weak.”
He says the strong net migration numbers may add some heat into the housing market over time, but it’s likely we’ll begin to see the impact of this on the rental market first.
Today’s figures from MBIE show on average 17,656 people are arriving in the country on work visas every month – almost back up to record pre-Covid levels in 2019.
Those numbers have been above 10,000 a month since September last year. So far this year, to the end of May, 88,275 people arrived on work visas, needing somewhere to stay.
Wilson says as the country heads into winter, many eyes will turn to the election to see if any new or unforecast policies emerge that may impact certain buyer types.
“However, history shows elections don’t typically have a significant impact on the housing market.
“Most likely, we’ll see some buyer types remain on the sidelines until the result comes in,” he says.