Spring is regarded as one of the key periods for the property market with buyers and sellers coming out of their winter hibernation. It tends to start in August and powers into top gear by early October before losing some momentum around the Christmas break.
During this spring period there is typically a 10% lift in listings although, interestingly, only around 3% higher sales.
The biggest months of the year for new listings are November followed by February and March, whereas for sales it’s March followed by November and May. Purely based on long term trends in the balance between listings and sales, the best time to buy property is during spring and summer when listings are proportionally higher than sales. The best time to sell your home is when sales are proportionally higher than listings, which is in autumn and winter.
So why do we see this behaviour? Firstly, it is not driven by the real estate industry or the financial sector industry, even though spring represents the start of the financial year for most New Zealand banks and nothing beats a great start to the year than securing a big slice of active new home buyers.
The largest factor is human nature. We tend to see winter as a time for going into our shells and consolidation. Like Mother Nature, we tend to come back to life in spring.
So is this spring going to breathe life into the property market?
The answer is a resounding yes if you live in Auckland, for the rest of the country I suspect not. Let me explain why I expect Auckland to experience an unusual period through spring and summer this year. It all comes down to the release by the Auckland Council of the new rateable values in November, which is likely to have a far greater impact on the property market than the general election.
In the run up to the November release date, expect to see a regular healthy flow of new listings, very much as expected for the time of year. However, what I expect we will see is a somewhat subdued level of demand. I believe that buyers will be reticent to actively commit in the market, cautious as to what the Capital Value (CV) of their newly acquired property will show come November. They will be wary of paying too much. Add to this a lacklustre period of sales during autumn and winter and you are likely to see a very slow market by Christmas. However let’s not ignore the proverb “fortune favours the brave” – it’ll be a great market for buyers.
Will this lacklustre sales period flow into 2015?
In my view, no. I believe that the release of the new CV’s will embolden property owners as sellers, confident from seeing the value of their house in writing via the Council CV. This, I believe, will see a surge in activity after Christmas which will allow the market to catch up and soak up what will be a healthy number of houses for sale.
A contributing factor at play by the early part of the New Year will be the normalisation of interest rates, which are unlikely to have been altered by then. It is also possible that some form of easing in the LVR restrictions might encourage that sector of the market.
So, as a buyer, the message would be to be brave and act decisively before Christmas. After-all, what you pay for a property is what you think it is worth, not what some piece of paper states. As a seller, spring may not be your friend and holding off until the summer maybe more beneficial.
Alistair Helm is a property commentator who regularly reports on and analyses the property market and the real estate industry. He is the founder of Properazzi a rich resource of insight and analysis on all things related to property and the digital transformation of the real estate industry.