The great thing about the real estate business is that things are always changing.

A major change in recent weeks has been the introduction of vaccine passes for many businesses and it’s expected these will become more commonly used in open home situations too, although as I write this before Christmas we are perhaps in a transition stage. Use of Covid QR codes is now well established.

Also in transition is the Dunedin residential real estate market. From a few months ago, when listing numbers were not much above 200 and open home numbers were commonly 20 to 30 groups for new listings, we are now heading towards 500 Dunedin listings and open home numbers are falling, particularly in certain price ranges.

It’s no secret that rising interest rates, tougher lending restrictions and the Government’s targeted crackdown on investors have had much to do with this change in mood. I’d also add that we are now six years into a price rise cycle and if history is something to go by, we are likely coming to the end of this cycle and could well be heading into a flatter period of house prices. That certainly is my impression from the past few weeks of business in Dunedin. Investors have been scarce and first home buyers are struggling with bank demands for mostly 20% deposits or more with new LVR (loan to value) restrictions. Most lenders have already exhausted lending quotas at deposits of 10%.  For investors, the deposit requirement was increased to 40% from May 1 this year. Those who qualify, investor or owner-occupiers, are required to prove to the nth degree they can afford their loan. https://www.rbnz.govt.nz/faqs/loan-to-value-ratio-restrictions-faqs

That appears to be leaving a greater portion of buyers who are looking to trade up or down and it’s noticeable that contracts subject to property sale are now not as rare as they used to be. That is good news for many who are looking to change properties and have been beaten by simpler offers.

There will always be exceptions and blips in the market, of course. At Nidd Realty we have noticed still strong interest in higher value homes and keen competition, with multiple offers, including the occasional unconditional offer. Buyer interest is coming from cashed up buyers including those returning from overseas and migrating from northern centres. Lower value homes are also attracting good buyer interest.

But the general frenzy and fear of missing out (FOMO) is fading. House prices are not falling as some would hope and many of the Government moves made to arrest rising prices are likely to have the unfortunate effect of making it more difficult, if not nearly impossible, for first home buyers to get a foothold on the property ladder. Median sale price in Dunedin now is well into the $600,000s and it doesn’t take a maths genius to work out that 20% of that is way more than many first home buyers could dream about saving. Where that leads prices is debatable, but it’s unlikely to be upwards.

SEASON'S THANKS AND BEST WISHES

Remember that December 24, 2021 to January 5, 2022 inclusive are non-working days for contracts and that most law offices will close a few days before Friday, December 24 and not reopen till after January 5. It’s best to contact your own lawyer to check their closing and opening dates.

As we near the end of another memorable year (not all for the right reasons), we must thank the many people we have encountered. We are so grateful for the wonderful testimonials we have received and the new friends made in testing times. We hope you all have a restful and rejuvenating festive season. We look forward to serving you in 2022.