Unrealistic market brought under control
Property pros are keeping a sharp eye on policy direction as the market stabilises in an election year.
The market looks solid leading into the next 12 months – not the excess of 2016 – and Harcourts Hamilton general manager Brian King and Lugton's Real Estate managing director Simon Lugton are pointing to the election as a player in further slowdown.
"We expect to have a very solid summer but we don't know what the election is going to do around that," King said.
"I think we are going to see, at this time next year, a similar market unless the government does something crazy.
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"That can be dictated overnight depending on what their housing policy is going to be."
The Real Estate Institute of New Zealand (REINZ) released its Monthly Property Report for May showing a national median price increase of 6.7 percent.
Prices in Waikato rose 20 percent in the past 12 months.
The meat on the bones of that 20 percent price increase in Waikato came in 2016 – a result of an "Auckland invasion" and migration from the rural centres, King said.
The market has calmed down since then. There is more stock and more days to sell but prices aren't falling back.
"We're back into a busy and buoyant market but a controlled market, it's just not out of control," King said.
Lugton said it's a steady market with 692 houses or 10 weeks worth of stock waiting to be sold.
March saw good sales numbers in the city with 335 houses sold. In April, that figure dipped to 238 – following a multi-year trend – while May sales figures climbed back to 309 houses sold.
Days to sell a Hamilton property have slipped from 37 days to 41. The median sale price in Waikato is $488,000, and the median sale price in Hamilton City is at $532,500.
Waikato Property Investor president Daryl Fisher said a number of investors will likely keep their hands in their pockets until well after polling day.
"They are just a bit more cautious and, when the election is over, it takes a bit to get back to normal," Fisher said.
Investors have stayed stayed out of the market after last year's round of loan-to-value ratio limits were put in place. Rents have gone up as a result.
But landlords have bided their time and will enter the market.
"What I'm starting to see is investors coming back into the market because the capital gains they had last year. Some have got up to that 40 percent now and are starting to come back out."
The brakes are being applied across the country, said head of Trade Me Property Nigel Jeffries, with asking prices dropping 0.6 percent in May compared to April.
"There's no need for homeowners to worry,"Jeffries said. "The market is still doing exceptionally well, but buyers will be pleased to see that the rate of growth appears to be easing back."
Lodge Real Estate managing director Jeremy O'Rourke said it's bringing an out-of-control market back in line.
"We've come from what were very unrealistic highs with the number of sales we were doing last year," O'Rourke said.
"They were numbers we hadn't seen, stock levels were falling to where we had never seen. It was quite an unreal market and, because we have come off that, people are saying the market has fallen.
"It hasn't. It's simply returned to normal levels for this part of the cycle.
"It's very much a market in equilibrium."