Praneeta Mahajan
Hamilton, January 27, 2023
Waikato is New Zealand’s fourth largest region, home to 9.5% of our population, and expected to grow bigger in the future.
In December 2022, the median sales price in Waikato was down 11.7% annually to $750,000. Sale volumes also saw a decrease of 42.6% when compared to this time last year. Adding to this slower pace of sales are buyers acting with caution. Many have been concerned about further increases to the Official Cash Rate (OCR), rising interest rates, and where our economy is headed in 2023.
However, it is important to bear in mind that December 2021 was busier than usual with Covid-19 restrictions easing, leading to a flurry of activity that month, which makes the variation of numbers compared to last year seem a bit steeper than usual.
Real Estate in Waikato
As per Real Estate Institute of New Zealand (REINZ) statistics, the trend in median price has flattened over the past couple of months. This is a silver lining to many sellers who have been watching the market with bated breath over the past few months.
The median days-to-sell trend has also been easing strongly over the past couple of months, which has been encouraging for anyone in the market or planning to sell soon. The Waikato House Price Index had a ‘middle-of-the-road’ return over the past 12 months compared to other regions.
The REINZ December 2022 figures show that house prices are still declining, with properties taking longer to sell across New Zealand, but the pace of decline is slower and market trends seem to be settling down now.
REINZ Chief Executive Jen Baird said, “Prices continue to ease but the pace of the decline is slower, and the market has settled at its new pace. Salespeople around the country are reporting that their sellers are tending to be more realistic and will usually meet the market through negotiation – although it is taking longer to sell, sellers, are still getting results.”
Market Forecast
Ms Baird suggested that for some buyers, now is a great time to be in the market.
“If you can make the finances work, this is a good time to be a buyer. More stock, less competition and price easing, will allow those who can get all the ducks in a row to buy well. We usually see a slowing of activity as we head into the festive season, and we are comparing this December to one that was right at the peak of the pandemic market.”
Although buyer caution is evident in the drop in count of sales, comparing this activity to the long-term trend, the current market is weaker. This is leaving a lot of choice for buyers with a 55.3% increase in inventory – now sitting at 26,057 properties nationwide.
“With interest rates rising and banks stress testing at 8.1-8.5%, buyers’ ability to secure finance and service a mortgage remains a key driver to buyers taking their time. As a result, properties are spending longer on the market with 40 being the median days to sell, 11 days longer compared to December 2021.”
Sharing her observation about the mood of the market, Ms Baird said, “Cheaper prices coupled with more choice for buyers means sellers have to be realistic about their price and timing expectations. With interest rates rising and banks stress testing at 8.1-8.5%, buyers’ ability to secure finance and service a mortgage remains a key driver to buyers taking their time. Sellers who are patient will end up finding the right buyers as the buyer movement is still consistent.”
Hamilton market expands
Hamilton’s population of 179,000 is expected to grow by 50,000 people by 2035.
According to the Hamilton City Council, at least 18,000 new homes are needed across the city to meet that demand.
There are several projects and developments underway to ensure this target can be met. This includes the development of new sustainable communities in Peacocke and Rotokauri.
Peacocke, one of Hamilton’s largest greenfield areas, is currently under development and is set to deliver a new bridge, main roads, parks, strategic water and stormwater networks.
The area’s development programme was supported by a funding package of $290.4 million from the Government’s Housing Infrastructure Fund to enable the transport facilities and essential services new homes and communities need.
Praneeta Mahajan is an Indian Newslink correspondent based in Hamilton.
