Owner occupiers should be no more concerned about selling or buying a property in the current environment than at any other time.
That may may sound a rash comment to make when there appears to be uncertainty around prices and mortgage interest rates, but the reality is, whether you are a first-time buyer or relocating, if you are buying a house that will become your home, you are likely to own it for 7 to 8 years.
Within that timeframe, the market will go through several cycles, and at no time in the last 75 years have house prices fallen, and stayed down, over a 7-year period.
That is not to say that you are guaranteed to make a lot of money over the 7 years, or that there may not be times when mortgage repayments are steeper than where your current comfort levels are at, but home ownership is more than simply a financial transaction.
A home is about stability, of bringing dependability to your life, and enables you to set down roots and become part of a community.
Contrary to what many believe, in Auckland, house prices are not falling quickly or steeply. They are starting to fall, but only modestly.
When you read or hear comments about falling prices, the first question to ask is 'compared to what?'
At the start of June, Barfoot & Thompson released its sales data for May, and this showed prices (median price) for May
- compared to the all-time high price (November 2021) were down 9.3 percent
- compared to May last year, were 4.9 percent higher
- compared to the previous month (April) were down 1.4 percent and
- the average for the previous 3 months were down 2 percent.
The most likely scenario is that prices will continue to edge lower for the remainder of autumn and winter before starting to stabilise in spring.
What has fallen significantly is the number of homes being sold. The extent to which it has dropped is hard to quantify because of the impact Covid-19 had on sales during 2021 and 2020. However, a reasonable estimate is that sales are about 20 percent down on where you could expect at this time of year.
Presently, the number of homes on our books are in the high 4000s, which means buyers are being presented with the greatest selection of properties to choose from in the past 10 years.
Vendors also need to keep in mind that if they are selling and buying in the same market, what they may lose out on in terms of selling, they potentially can make up when buying.
In property, there is a truism that says, 'time will ultimately take care of price'. With that in mind, those prepared to take a long-term view may well be better placed to buy the home of their dreams now than when mortgage interest rates start to steady.