Have 40% of owners who listed last year cut their asking prices? Areas worth buying in during 2023

Widespread property price cuts in 2022

 

According to the latest data from New Zealand property website Realestate.co.nz, in an effort to sell their properties quickly last year, owners of nearly 40% of properties listed during the year reluctantly reduced their asking prices after listing. Fierce market competition directly contributed to a decline in new listings. Comparing nationwide new listings in December 2022 with December 2021, the total fell by nearly 26% year on year.

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But this does not mean the housing market has run out of properties to buy. Quite the opposite: there are now more properties on the market for buyers to choose from. Nationwide, housing inventory rose 55.3% year on year. In Coromandel, Nelson, Taranaki and the central North Island, the number of properties currently listed is more than double that of a year earlier. In this challenging buyer’s market, 39% of properties listed nationwide in 2022 had their asking prices reduced. This included properties that failed to sell at auction and were subsequently offered by negotiation or at a fixed price.

 

This trend may continue into 2023. So which areas should buyers pay particular attention to this year?

Which areas are worth buying in during 2023?

 

Realestate.co.nz spokesperson Vanessa Williams said the national median house sale price fell to NZ$925,000 in November last year, down 12.4% year on year. Williams said the unwinding of the pandemic-era surge in house prices was not necessarily bad news for buyers. Looking across New Zealand, she believed the markets in Auckland, Wellington, Hawke’s Bay, Taranaki, Otago, Waikato and Nelson favoured buyers, with fewer buyers and more homes for sale creating a buyer’s market. James Wilson, head of valuations at property data company Valocity, also saw 2023 as an opportunity for buyers to purchase at lower prices. He expected homes closer to city centres to become more attractive purchases as prices fell. When Auckland house prices became unaffordable, buyers shifted to surrounding areas such as Hamilton, Tauranga, Hawke’s Bay and Gisborne. In a weak market, he believed buyers making their next property purchase should consider major economic centres wherever possible, because these have historically been the strongest-performing property markets. They also tend to be the last to fall and the first to rise, meaning buyers generally achieve the best long-term investment returns. James Wilson, Valocity’s head of valuations As an example, Wilson considered rental yields on central Hamilton properties attractive to investors. He said properties there were currently a fairly good investment option, and falling prices and reduced buyer competition should offer opportunities to find a suitable property. Many central Auckland areas were also worth considering, particularly neighbourhoods on the fringes of the CBD, such as Ellerslie, Onehunga, Three Kings and Mt Roskill. He said these areas had good public transport networks providing easy access to central Auckland, and viewed the post-pandemic return of economic activity to CBDs as a global trend. In addition, established central suburbs have good infrastructure, making them highly attractive to investors and first-home buyers in the current, less competitive market. Wilson noted that first-home buyers had been forced to rule out these central locations during the years of soaring prices. Now was the time to take another look, as they might be pleasantly surprised by what a buyer’s market could offer. Kelvin Davidson, CoreLogic’s chief economist So should buyers still consider Wellington, the major city with the largest price falls in this downturn? CoreLogic chief economist Kelvin Davidson said yes. He considered Lower Hutt in the Wellington region one of the areas with the largest price falls nationwide. However, its substantial supply of new homes meant buyers would still have opportunities to find suitable properties. Canterbury also remained the country’s most attractive region for domestic buyers. Davidson said that although house prices would continue falling across most of New Zealand in 2023, some areas would see smaller declines. These could include Ashburton, Timaru and Waimakariri in Canterbury. Prices there had not risen as far to begin with, making them more affordable, while their solid agricultural economies encouraged people to settle and work there.

 

Davidson believed that in 2023, buyers should closely monitor Auckland and Wellington house price trends. Prices in these major cities had already fallen substantially, making them more likely to reach the bottom and start recovering sooner. As New Zealand’s largest property market and commercial centre, Auckland would be the first to benefit from a recovery in net migration.

 

Ray White chief auctioneer Sam Steele believed South Auckland properties were also worth watching. Prices there had risen “extraordinarily” over the past two or three years, but the market correction offered opportunities to find cheaper properties. He explained that falling prices meant buyers could still purchase a sizeable property in some good areas for less than NZ$1,000,000. First-home buyers who did not want townhouses or apartments should particularly consider looking in South Auckland. Areas such as Manurewa, Papatoetoe and Mangere had numerous three-bedroom homes of around 500 to 600 square metres listed for just NZ$600,000–700,000. Steele also believed property prices in smaller cities and regional areas, such as Gisborne, Hawke’s Bay and Whangarei, were worth watching. After the housing frenzy of recent years, prices in these regional centres had eased, improving affordability for buyers, particularly first-home buyers. A budget of NZ$800,000 might only buy a townhouse in Auckland, but could secure a detached four-bedroom home with a backyard in Whangarei. So which area are you most interested in for property investment in 2023? Let us know in the comments below.