Property Prices Tied To Market Confidence

Property Prices Tied To Market Confidence

Residential property sales in October were tied to local market confidence, as trends continue to rollercoaster from month to month, First National Groups monthly office survey shows.

Thirty percent of First Nationals real estate offices reported an improvement in buyer confidence in their markets, compared with September. In all of these areas bar one, sales were also up month on month.

However 48% reported buyer confidence was still as low as September and 22% said it had dropped even lower.

Offices in the main cities reported noticeably lower buyer confidence than those in small provincial towns.

Areas of higher confidence showed increased enquiry and attendance at open homes, more sales, acceptance by vendors of lower prices, buyers becoming more serious and older listings selling.

Areas with low buyer confidence showed a lack of sales, low auction clearance rates across all real estate companies, banks still requiring strong income streams and job insecurity.

First National Group general manager John Stewart said monthly trends resembled a roller coaster in many markets.

"One month an office has low buyer interest and next month, it has the best sales in 18 months. That's possibly a supply and demand issue but more likely it reflects the variable and tenuous hold people have on confidence to move.

"We disagree with recent comments by Alistair Helm of www.realestate.co.nz that the 'usual spring lift has passed the market by, this year. Our view is that it has been delayed.

Diligent analysis would unearth a number of reasons, including some unusually inclement weather, the national effect of and preoccupation with outcomes of the Canterbury quake, insecurity over interest rates [especially those waiting for the fixed rates to settle lower] and mixed messages from commentators over whether prices have settled.

Indicators now are that even since the end of October, buyer interest has risen in the majority of areas, as have listings. While this summer will not write any records, there is undoubtedly a lift under way. A responsible expectation would be for a 10% lift over winter levels and more stability of that trend into 2011 rather than the major dip that commenced in January this year.

Overall, October sales volumes were similar to September but lower than October 2009.

Of note, fewer sections were sold this October compared with October 2009.

Prices continued to drop month on month in all types of property (ie 2brm, 3 brm and 4 brm) in over half the areas represented by First Nationals offices.

However, 3 and 4 bedroom properties held their prices better than two bedroom properties.

ends

© Scoop Media