Are you wondering what you need to know when navigating the Wanaka housing market?
Well you are not alone! I have clients & friends thinking the same thing; and I have even been asking myself on a daily basis about the trajectory that the Wanaka market is going to take in the coming months.
Until this week I had been reasonably convinced that we were still plateaued at, what I had considered to be, the bottom of the current cycle; national and global economic indicators were indicating that this could be the case.
Much of the vendor agent enquiry had seemed to be homework gathering, with many members of the public being filed by vendor agents into the tyre kicking cubby hole.
I am beginning to sense that perhaps this is changing. I have heard about quite a few sales this week, and there seems to be buyers flying in to Wanaka specifically for viewings.
Record Wanaka house listings
There are record levels of property listings in Wanaka – much of them having sat for a looooong time or are being relisted after not having sold over recent very quiet months. Hence most stock is well picked-over and has reasons why it hasn’t sold, or is too optimistically priced.
High volumes of listings have traditionally had implications – it is the age old supply and demand story – when there is less choice, the prices statistically creep higher.
Some of the better properties being marketed at the moment are flying a kite – seeing what they could get for their property and unloading it only if they can get an opportunistic price. This is best attempted by vendors who have an offering which is most likely to get emotional appeal – that “must have” factor.
Off market trading in Wanaka property
Significant levels of off market trading is occurring. There are many vendor and agent reasons for this, and that is a whole new topic in itself.
This is where having a buyers agent on the ground in Wanaka working for you comes into its own. The off market playing field is accessed through private and pre-market listings. These are both opportunities that I actively target every day.
I have heard of record numbers of vendors poised to put their homes on the market and holding off as long as they can – however time is running out for the perceived good weather window of selling, but also the opportune busy periods for show weekend and Easter for maximum exposure.
Sadly I have become more aware of properties on the market out of necessity. What a bugger having to sell on a low market. The problem with some of these vendors taking money out to ease the burden of higher mortgage repayments, and reinvesting at a lower level, means that there is quantumly less value for the dollar as the prices creep lower because there are more buyers (and thus more competition) as prices get lower.
For example, there is a real sweet spot below $2 million. Getting a sale over the $2 million mark is actually very difficult currently. Ten years ago I recall when that magic number was $1 million. At $2.2 you get more than $400k worth of property than at $1.8. Many buyers have a ceiling of price without a ‘2’ in it – and often that is a psychological reason, rather an absolute financial reason.
Retail outlook for Wanaka not looking good on paper, but feels positive on the ground.
The outlook for retail is reported by financial analysts to be poor. However, tourism in Wanaka has been very strong over the past month in particular. Many locals would say it feels like it is back to pre Covid levels. This is mainly felt when navigating supermarket aisles and trying to find a car park! Chinese New Year and associated events had a noticeable impact on the number of tourisms in the region.
Are Wanaka house buyers having FOMO?
No, Wanaka buyers are certainly not demonstrating FOMO. Many are content to wait to find the right property, and are mindful of what happened in July 2020 and into 2021 when there was a frenzy to purchase and the prices got away on them.
Are Wanaka building consents on the rise again?
Although there is a falling number of dwelling consents being recorded, speaking with a Wanaka home building company this week, they have seen record activity that they last observed 17 years ago. Many people have restored confidence in the building industry and are ready to proceed with paused projects, or are keen to build rather than buy existing Wanaka property.
Wanaka buyers feeling the pinch with finance issues
Inability to access finance is still a major stumbling block for many Wanaka property buyers. We are seeing many cases where conditional sales are not converting to unconditional sales because of buyers being unable to procure funds.
Another factor is the domino affect that this then has on a chain of sales when a single dwelling purchase doesn’t go through. As a result, Wanaka vendors are less keen to consider offers conditional on finance. Access to finance is a key impediment for many buyers and a reason why a still large proportion of deals are falling over.
Wanaka open homes are popular
Open homes seem to be busy – however they always are on inclement days, especially in January – but I believe that there seems to be consistent levels of enquiry on marketed offerings. This indicates definite intent from Wanaka property buyers.
Are overseas buyers still hot for Wanaka property?
There seems to be slower interest from overseas buyers compared to immediate pre covid levels. Whether the implications for travel in general and access to foreign destinations during the pandemic put some people off – not sure. Some buyers have indicated exactly the opposite and the desire to be able to join NZ if there was a future episode is stronger than ever – these seem to be buyers from further afield than Australia.
Pre and immediately post election, excluded buyers were definitely getting their hopes up about being able to return to being able to purchase.
Record number of investor property sales
It has been reported that 14% of agents nationally have reported that investors are bringing more properties to them to sell. This is the highest reading on record and could indicate that for the moment (despite upcoming tax changes for investors) many investors are of a mind to reduce their presence in the rental property sector.
It is apparent that the main motivation of investors looking to buy residential property is the hope of finding a bargain. Interest rates are still too high to act as a buying motivator – in contrast to the case during 2020.
Are their still bargains to be found in the Wanaka property market?
One of the questions I am currently being asked frequently is “are there bargains out there?”
This reminds me what I witnessed during the Global Financial Crisis. Most vendors continue to be bullish and solid in their price expectations, but there are a number out there urgent to convert their property to cash, and this definitely has real impacts on the prices that these properties sell for.
Conversations out-and-about see opinions that the recent signals by the Reserve Bank as the usual pre relaxing monetary policy signals and that people are reacting accordingly in anticipation of lowering interest rates in the coming months.
Financial analysts are signaling a more conservative approach, still seeing inflation as well beyond the Reserve Bank’s target range of 1% – 3%.
There is currently still a lack of evidence showing that key drivers of inflation are under control. Banks are not reacting in a synchronized manner to this information, which does make things a little confusing when I try to make sense of the direction and timing of the easing in rates.
A more reliable indicator may be to head in and analyse deposit rates. A job for this week maybe, although the irregular banking opening times are somewhat annoying.
So what’s A Buyer’s Agent’s plan for navigating the current state of the Wanaka property market?
Key motivators of the team in my camp remain in finding those outstanding properties amongst the crowds which are going to blow our buyers socks off.
Yes, it is absolutely the aim to be on the right side of the equations, but finding the golden opportunities is the key to creating life changing purchases.
We find properties for buyers, we don’t sell real estate.
We are seeking buyers from outside Wanaka looking to relocate or invest in our beautiful town. If you want to work with someone trusted with your best interests at heart to act on your behalf with the inside knowledge, then right now is the perfect time to get in touch.
Email Nicky: [email protected]
Web: buyersagent.nz