Is the current property market a blessing or a curse for owner-occupiers? The challenges of buying a home to live in

Before this year, buying a home to live in was no easy task. Buyers generally have more requirements for their own home than for an investment property: it needs to meet, as far as possible, the needs of the whole family, both now and well into the future.

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When house prices were rising, the market always seemed unfriendly to owner-occupier buyers. They often had to compromise in one way or another to “win” in the fierce competition for homes. Properties in desirable school zones, for example, were always a focus for investors. If buyers did find a home that met all their requirements, they would usually have to pay far more than they had been prepared to spend.

 

Has the best buying opportunity for owner-occupiers really arrived?

 

A recent survey of mortgage advisers conducted jointly by independent economist Tony Alexander and mortgages.co.nz in September indicates that first-home buyers have clearly returned to the property market. In the latest survey, 47% of mortgage advisers reported seeing more owner-occupier buyers seeking help with loans, whereas in August last year only 8% of brokers reported seeing more first-home buyers entering the market. Tony Alexander said this was the highest reading since he first conducted the survey in June 2020. The figures clearly show that owner-occupier buyers are returning to property markets throughout New Zealand. In stark contrast, most investment property buyers have temporarily withdrawn because they cannot sustain continually rising mortgage repayment costs.

Prominent independent economist Tony Alexander

 

The latest property report from realestate.co.nz shows that, as house prices fall, prospective buyers in Auckland, Wellington and Waikato will find the market continued moving in their favour over the past month. The report says New Zealand's property market became a buyer's market again in September, for the first time in 10 years. That month, more than 10,000 properties were listed for sale in Auckland. The region's stock of properties for sale was up 73.4% on the same time last year, giving buyers more choice.

Realestate.co.nz spokesperson Vanessa Williams

 

Vanessa Williams, spokesperson for realestate.co.nz, said she believed current market conditions offered buyers a very good opportunity. The property market has slowed, and with less competition, buyers have more time to weigh their options, make decisions and negotiate the best price with sellers. Finding a suitable property in a near-frenzied market presents many challenges. Buyers may, for example, have to make quick decisions under competitive pressure that are not necessarily wise, without enough time to investigate the property thoroughly. She also said buyers who purchased at the market's peak need not worry unduly. In her view, homeowners cannot lose money if they hold for the long term, and over the past ten years she had not met a buyer who regretted purchasing because they had lost money. She concluded that most buyers simply seeking a home to live in should buy when they can afford to, rather than becoming caught up in indecision over minor market movements.

 

Falling house prices and an expanding choice of properties are bringing homes in good locations and desirable school zones, once beyond the reach of many owner-occupier buyers, back onto their radar. 2 recent sales by Barfoot & Thompson particularly caught YIJU's attention. By introducing these 2 attractive homes, we hope to answer the question: is the current market a blessing or a curse for owner-occupier buyers?

 

Case study 1

 

The first property is a newly built home in Remuera, a traditionally prestigious residential suburb. With many of Auckland's top schools, attractive surroundings, convenient transport and comprehensive amenities, the area has long been highly sought after. For owner-occupiers, buying a new build offers not only the latest design ideas, advanced construction techniques and materials, but also a building quality guarantee. New homes also have energy efficiency and environmental advantages that older homes cannot match, and can save homeowners considerable maintenance and upkeep costs over the long term.

 

 

According to pricing information from property valuation software, homes in the surrounding area are generally priced at around $2,100,000–2,400,000. This property ultimately sold for less than $1,950,000, giving the buyer a real bargain on price.

 

So how can buyers find a desirable home that offers quality at an affordable price? We invited Frances Li, the Barfoot & Thompson agent who sold the property, to share her first-hand experience.

 

 

 YIJU:  Compared with nearby properties, why do you say this buyer secured such a bargain?

 

Frances Li:  This spacious three-bedroom home's layout is very well suited to family living. Although the section is not large, it has lovely views. It is brand new, solidly constructed and built with high-quality materials. It is also in a school zone and has convenient transport links, making it very suitable for owner-occupiers.

 

The buyer did not actually have any particular requirements on price. Buyers looking for good homes in an area like this want to find the perfect property without having to fight for it, so good homes here still sell for strong prices. This buyer fell in love with the property at first sight and bought it at auction. Although only 1 buyer bid on the day, both buyer and seller ultimately achieved the outcome they wanted.

 

YIJU: How can owner-occupier buyers seeking a better quality of life make the most of current opportunities?

 

Frances Li:  Buying a home to live in means buying a lifestyle. Many buyers choose a less-than-perfect home because it is cheaper, only to feel some regret later. Both supply and demand are increasing in the current market, and good homes are starting to become available. A good home is never the cheapest option. Some fortunate buyers are securing the homes they want at prices they are happy with in this weaker market. To me, that is the most successful kind of purchase. Even if you pay a little more for a good home, its value will still become apparent over time.

 

Case study 2

 

This property is an end unit in a townhouse development in Flat Bush. Compared with a typical townhouse, an end unit receives natural light from three sides, so living in one often feels more like living in a standalone home. If a fortunate buyer finds an end unit adjoining a green space, the living experience can be every bit as good as that of any standalone home.

 

The property in this case study is just such an end townhouse, beside a central green space. Its garden connects directly to the park, with natural light and surrounding views complementing each other beautifully. The location is also excellent, with neighbourhood parks and the shopping centre within walking distance. Imagine the pleasure of strolling with the family through a park in lovely natural surroundings after a meal, while the children play in the playground.

 

 

Designed and built by a well-known developer, this home was only 2 years old and ultimately sold for $1,160,000. Compared with nearby sales and current valuations, it suggests the present market is the best opportunity for many owner-occupier buyers to secure the home they want.

 

 

 YIJU:  Why do you consider this an ideal home that owner-occupier buyers should seriously consider?

 

Tian Qiu：This is a new end townhouse built by well-known developer Fletcher Living. Its excellent quality meant it sold very soon after being listed. It was sold at auction. In the past, competition for homes like this often drove prices to extraordinary levels at auction, and they would have attracted a substantial premium even through other sale methods. This time, four groups of buyers competed and the property ultimately sold for a very reasonable price. I feel the buyer seized the opportunity very well and secured an ideal home.

 

YIJU: How can buyers make the most of opportunities in the current property market? What advice would you offer?

 

Tian Qiu：I strongly recommend that buyers pay particular attention to the new-build market. New homes generally offer the latest designs, and their pricing is now very reasonable. Buyers can readily find homes in today's market that meet all their requirements, making this the best time for owner-occupiers to buy. Where else can they find such opportunities? I suggest keeping an eye on property auctions. Both buyers and sellers are now very realistic, and plenty of good properties at good prices will appear at auction.

1/86 Ireland Rd, Mt Wellington

 

For those seeking similar opportunities, there is also a high-quality development of compact 3-bedroom standalone homes at 86 Ireland Rd, beside the bay in Mt Wellington. It is a very good option for first-home buyers seeking a quality lifestyle. The properties have just been listed, with a range of layouts still available. They are well worth a look.