Some top of the south price expectations too high in static market: REINZ

Nelson has bucked the national trend of falling house prices in May, recording a 2.7% year-on-year increase, new data shows.

But people selling houses in the top of the south are being too slow to react to the market and adjust their price expectations, the Real Estate Institute of New Zealand says.

In its May property report, released this week, REINZ reported that median house prices in Nelson rose to $770,000 – the only region to record an increase.

Next door, Marlborough’s prices decreased by 6.8% in the same period to $635,000, while Tasman dropped 12.9% to $745,000.

READ MORE:
* House sales jumped 30% between April and May: Real Estate Institute
* Here are the suburbs with the biggest house price falls
* Why now is the best time to get on the property ladder

“Across all three regions, there was a mix of owner occupiers and first home buyers active in the market. Investors continue to shy away despite the recent announcement of tweaks to the loan-to-value criteria,” REINZ chief executive Jen Baird said.

The median length of time for houses to sell across Te Tauihu was 58 days, “much more than the 10-year average for May which is 41 days”, the report said.

There was also a big increase in the number of houses for sale, with 23 weeks on inventory – eight weeks more than a year ago.

“Local salespeople say the market has remained static with some vendors still reluctant to come to market due to their price expectations above the threshold of what most buyers are willing to pay,” Baird said.

However, Chris Davies, owner of Harcourts Platinum Blue in Nelson and Richmond, said the sellers they were seeing were largely aware of the need to move with the market. That was reinforced by sales figures for the last 6-12 months which clearly showed the trend.

“More people know they need to make changes and are doing it,” he said. “There will always be some that just hold fast.”

However, most understood that it came down to buying and selling in the same market.

Davies said the contrast between Nelson and Tasman house price movements related to the different housing stock, with Nelson’s limited, older stock less likely to fluctuate as much as the greater number of newer homes in Tasman, particularly in new Richmond subdivisions.

Meanwhile, earlier in the week, the QV House Price Index showed values in Nelson were, on average, 9.3% lower than the same time last year, with the average property now valued at $783,640 after a decline of 2.4% in the May quarter.

In Marlborough, the decline was 4%, putting the average value of properties at $687,421.

While values continued to retract, the pace was slowing and confidence appeared to be turning the corner, Nelson/Marlborough manager Craig Russell said.

There were still properties being forced to drop their price, particularly in Richmond, he said.

“There is still a glut of properties for sale in the $900,000 to $1,500,000 price bracket – particularly in the wider Richmond area. These properties need to be competitively priced to meet the market, and so we’re continuing to see some price reductions to align price expectations with the market.”