Real estate agents exit industry as Bay of Plenty sales volumes plummet


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Bay of Plenty’s residential and lifestyle property sales have dropped by 41.6 per cent in one year and some real estate agents have exited the industry off the back of the “tough” market.

A rapid rise in interest rates is believed to have had a big impact and the boss of the Bay’s biggest agency said properties were taking longer to sell and pricing was down about 10 per cent. Another likened it to the “bubble bursting” but said it could benefit first-home buyers, who would need less money for a deposit.

A OneRoof-Valocity Year in Review report published today reveals that to the year ending in October, Bay of Plenty residential and lifestyle properties sales fell by 41.6 per cent to 4130. Included in those figures were 1173 first-home buyers and 1182 investors, with those categories buying 32.2 per cent and 49.6 per cent fewer properties respectively over the same timeframes.

A snapshot of Tauranga showed the average median house price fell $135,100 from a peak of $1.25 million in April to $1.23m now. The biggest sale was a house on Oceanbeach Rd in Mount Maunganui in May which fetched $11m, while the lowest was an apartment in Durham St that sold for $316,500 in July.

Mount Maunganui also had the highest suburb average property value at $1.5m, while Parkvale was the lowest at $692,000.

 Managing director of the Realty Group Limited, which operates Eves and Bayleys, Heath Young. Photo / Supplied
Managing director of the Realty Group Limited, which operates Eves and Bayleys, Heath Young. Photo / Supplied

Managing director of the Realty Group, which operates Eves and Bayleys, Heath Young, said the recent rapid rise in interest rates to combat inflation has had a big impact on property trading volumes.

“This has resulted in property taking longer to sell and pricing to be back approximately 10 per cent when compared to values from a year ago.”

He said all traditional sectors were still buying and selling, with noticeably more first-home buyers replacing the reduced investor activity.

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“If you are looking to sell and buy in this market for the purposes of upsizing, downsizing or moving within the region then it is certainly a good time as any value reduction in your own property made on the sale is matched by the fact that it is also costing less when you purchase.

“Across our branches, we are back 10 to 20 per cent on volumes transacted compared to last year.”

Young said there were certainly agents leaving the sector.

“It is clear that those agents that recently come into the industry over the past couple of years have a higher representation when analysing those leaving the industry at the moment.”

Tauranga Tremains Real Estate managing director Anton Jones. Photo / George Novak
Tauranga Tremains Real Estate managing director Anton Jones. Photo / George Novak

Tauranga Tremains Real Estate managing director Anton Jones said the market had changed drastically and “quicker than I’ve ever seen it”.

He said higher interest rates were a factor and banks had tightened up on lending due to the Credit Contracts and Consumer Finance Act, which was introduced in December last year and then amended.

“Finance is a massive challenge within the industry at the moment. The market had also been going up and up and obviously the longer it goes up the bigger the fall.”

He said over time a lot of landlords had cashed in on their investments, which had all led to the “bubble bursting”.

“It was pretty evident in January and February that things have changed. And it immediately got harder to sell properties. They weren’t selling quick enough, therefore a lot of people were sitting on their hands waiting and that affects property prices.”

He said there weren’t as many people entering the real estate industry because everyone knew it was harder.

“You tend to find when the market is going nuts people go ‘oh I may as well get into real estate because I’m going to kill it’. There will be a lot of older, perhaps more experienced agents who will be going ‘I can’t be bothered going through another one of these recessions … it’s too tough and I’m going to get out’.

“If you are not selling it’s difficult.”

Jones said this could be a good opportunity for first-home buyers to buy before the next upswing.

“That is a sliver lining component … There is less competition and those who are in a bit of trouble might have to sell quicker and take something less and a bit more realistic to what they think.”

Sales figures were down by about 20 to 30 per cent, although that fluctuated and while last month was a great month, this month had been busy, Jones said.

Valocity head of valuations James Wilson said it was important to note that when sales volumes were low, it was very difficult to actually pick up what was going on in the market.

“Has every entire property gone down in value across the board at the same level? The answer is no and in Tauranga, we have seen a couple of key things happen. Investors who have been quite active a year ago and even more active the year before took a very noticeable sideline and sat back and just watched.

“They are being very cautious in terms of their next purchase.”

People who were buying a second home also got cautious and had not re-entered the market, while the first-home buyers remained active.

“They worked out that with less investors and owner-occupiers competing for similar housing they had a good opportunity to make their purchase which they probably couldn’t have made a year ago. So that is really how the last six months have shaped up.”

Consequently, the sales composition had shifted to the lower end of the market and a good listing in this bracket was probably not going to sell at a massive discount.

“There are still the buyer pools there for the right properties.”

Wilson said Valocity did not believe there would be a huge summer surge in sales volumes. Activity was likely to stay low.

However, in his view, at the moment nothing indicated sales values would get significantly worse as the Reserve Bank of New Zealand had been really clear about the Official Cash Rate and the banks were factoring that in.

“You’d be under a rock if you weren’t aware interest rates are only going one way.”

OneRoof editor Owen Vaughan said the property market was headed into “uncharted territory” next year and “we haven’t hit the bottom yet”.

“Depending on where inflation sits at the end of this quarter it will really determine how much further we have to go.”

An ANZ spokeswoman said generally when the housing market slows, home loan applications tend to fall as well.

As a responsible lender, it was important its customers could effectively manage their lending once they’re in their homes. This meant collecting the right level of information from customers to ensure the suitability and affordability of any lending, she said.

A Kiwibank spokeswoman said most customers would have at least a 20 per cent deposit.

‘‘As well as looking at the deposit amount and how much someone earns, Kiwibank considers the stability of the customer’s income. Whether the deposit was gifted or saved, what other debts they might have, what they spend, and the ability of the borrower to repay the loan at a higher interest rate but that might reasonably be expected over the term of the loan.’’



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