Crystal Ball – 2022 Edition

The question on everyone’s mind is “what is the real estate market going to do?”.  Here’s our prediction for our local market for the year ahead. 

Let’s start by looking at what we observed last year:

• 2021 saw unprecedented activity resulting from historically low interest rates, historically low numbers of property for sale, large numbers of first home buyers “cashing in” their KiwiSaver funds and a redistribution of funds into real estate that may have otherwise been invested elsewhere or spent on discretionary items.
• Depending on which rolling 12 month period you look at, national and local property values jumped 30-40% on the back of this activity.
• That level of activity is unsustainable long term so it has to slow down at some point. 

Now we’ll look into the changes we have noticed since about December 2021:

• The CCCFA changes that came into effect on the 1st of December had an almost immediate effect on the market. It has made it much harder for certain sectors of the buyer market to gain the finance they were relying on to buy a home or even to roll over a pre-approval they may have already had. 
• Interest rates have increased slightly and signals are that they will continue to do so.
• The volume of buyers making decisions has decreased, however we are still seeing competition more often than not whether it be at auction, deadline sale or any other private treaty method of sale. For the first time in many months we have seen the number of transactions ease from the months prior across most of the country.
• There are more properties for sale at the moment than at any stage last year, however it is still historically low in most regions.
• Omicron is here and making its way through the community. 

What does this all mean now and for 2022?

Even though our local market has seen impressive growth over the past 18 months, we still believe it is undervalued compared to most other parts of the country because our market did experience the same growth as the rest of the country in the past 10 years (post earthquake). If we look at the other median sale prices in regions with large cities and compare them to Canterbury, it looks like this for January 2022 (Source REINZ stats):

• Canterbury $650,000 with Christchurch City at $665,000
• Otago $735,000 with Dunedin City at $670,000
• Waikato $830,000 with Hamilton City at $839,994
• Auckland $1,200,000 with Auckland City at $1,310,000

This means we are in the best position to weather any reduction in price and are still likely to attract plenty of attention from the rest of the country as they look to shift or invest here to get better value and a better lifestyle as they discover the city is rebuilding and they can work from home.

Interest rates are rising but they still remain historically low compared to what we have been used to in the past 20 years. 

Even though the market has eased, it’s still better than “normal”. The average days on the market are still great (35), the median sale price is still holding strong and we are still down on properties for buyers to buy!

Our local market is in a strong place to come through any kind of correction, better than anywhere else in the country. We might see pricing stabilise for a period which is still a favourable result and we do have ground to make up on other parts of the New Zealand market. With this said, 2022 is a positive time to trade & invest in our local market. For expert advice please talk to one of our real estate professionals today.