'Sell High - Buy Low'
Updated: May 13, 2020
My thoughts on what’s happening to the property market. By Diego Traglia This is the time of the month when I normally create a market report to see what SOLD in our area; to see if the market has gone up or down; to see how many days it took to sell; etc., etc. But considering the situation and the strange times we find ourselves in, all of this is somewhat irrelevant. In a way, what happened last week has no relevance to what is happening right now, let alone last month’s sales data.
So without making it too long, I thought this month I would share with you my thoughts on what’s happening in the market right now. Level 2 is upon us (finally!), and things will slowly start going to a certain level of normality (hopefully!). With that, the question that everyone seems to be asking me is this - "Will the property market take a dive?"
Now let me say in advance, I do not have a crystal ball. If I had one, I would be sipping pina coladas somewhere hot and sunny on my yacht, but I do not have a yacht, so I cannot predict the future. But because I am so active in the market place, I do have a pretty good helicopter view of what is currently happening in our market, and I do have a few predictions on what will happen in the next 3/6/12 months. So here they are.
I feel that we are currently experiencing a 'sugar hit.’ There are many residual buyers who have to buy. What I mean by that is that buyers are frantically trying to find their new home. One reason for that might be that prior to Covid19 they SOLD their property. Or it might be simply that circumstances have changed, and they are in a position that they need to find a house. The other side of the coin is that we have suppressed listings due to COVID-19; therefore, prices are supported by buyers buying in a low listing environment. Without a doubt we have a decrease in prospective sellers due to less stock to buy. Think about it - if you are looking to upgrade/upsize, but there are no properties to buy, you are not going to sell your house. On top of that, the decline of Government stimulus will see a correction/dip in the market which will shift to a Buyers’ Market.
As of now (13th May, 2020) I have yet to see a drop in values. In some cases, I am still seeing premium prices achieved. Just a few days ago I sold a property on 37 Quinns Road, Waiatarua, in five days, $486k above CV after presenting a multi offer. That’s an unheard of result which goes to show that the market is still bubbling.
Of course, this won't be sustained, or will it? The biggest challenge that I am facing now, (and I know my colleagues across all agencies are facing too), is the lack of listings. Have a look at the graph below. There are very few new properties coming on the market, and the ones that come on, as soon as they go live, the agent is inundated with enquiries and viewing requests.
So what next? The brave and courageous are selling their house; then going to rent or stay with family when possible; and then will buy again in 12 months or so.
Again, I do not have a crystal ball, but if I had to bet $10,000 on what the market will do in the next 12 months, my bet will be that the market will drop, in some places more than in others. Some experts are expecting a drop of 10%. If that is the case, it may mean that before your house returns to today’s value, it could be a few years.
I personally don't think the market will drop 10%. I am more of an optimist. My prediction is a drop of around 5-7%; but then again, there are so many variables, both nationally and internationally. All that we can really focus on is – “what’s happening RIGHT NOW,” because, frankly, what happened last week or last month, is no longer relevant.