Napier property prices improve in response to shortages

Sales turnover hit a peak in July with 134 sales. Volumes have eased back during the subsequent months, however, the past quarter has been the strongest since 2007, up a massive 63% on the same quarter last year. This surge in activity appears to be driven by activity in the middle and lower end of the market where purchasers are incentivized by low interest rates and benefits offered to first home buyers.

According to realestate.co.nz there were 366 properties for sale at the start of September and 169 new properties were listed during the month. Then 68 withdrew from sale (primarily vendors whose motivation to sell eased, or whose expectations were unrealistically high) and 112 properties sold. Overall the market shrunk to 355. A lack of properties available for sale is limiting the scope of potential house sales in the months ahead.

Limited choice is now beginning to lead to an improvement in property prices in Napier, particularly in mid-range properties, and while the shortage of stock continues we expect this to continue in the months ahead. This trend is likely to be restrained by affordability issues such as local income constraints. REINZ reports that the current median price in Napier is $337,500. Quotable Value reports that present prices are an average of 1.3% higher than a year ago. The Quarterly Price Index shows that at current levels prices are similar to those being achieved at the market peak in 2007 / 2008.

Well-presented properties in popular localities which are correctly priced are attracting excellent interest, often receiving multiple offers and selling for above average prices.

Although consumer confidence appeared to ease this year, households don’t appear to have been spooked as much as businesses by the drop in dairy prices and uncertain global economic prospects. The Reserve Bank and the New Zealand dollar, have both responded to these challenges – with the Bank cutting the OCR further in September, and the dollar depreciating 12% in the past three months.