Widen Your Criteria
Listings are low across New Zealand – how can you find the right property when there are so few coming to market, asks Campbell Venning.
1 February 2018
There’s one mantra I’m hearing from real estate agents all over New Zealand: we want more listings. The Newshub headline on January 4th said “House listings at record low, prices all-time high.” Hopefully, this month and March will bring a big upsurge in listings and give investors more choice. But with the doom and gloom headlines about property values that we read in the major newspapers, I have my doubts. As we saw last year, if people feel worried about the market, they tend to do nothing. It’s human nature – sit tight and assess the situation before you make your move.
That’s both good and bad news for buyers. The bad news is that you’re limited when it comes to choice. I know several investors who have quite specific criteria for the properties they buy: like, it must be one or two bedrooms, in one of these three suburbs, and priced below $250,000 for instance. Those investors, the ones with the checklists, are having difficulties. There’s nothing to buy. If something does come onto the market that ticks all their boxes, other cashed-up investors are also ready to bid and suddenly it’s sold for $270,000 and they’ve missed out… Again. This isn’t always the case, but certain properties that are particularly investor-friendly are still going to sell rapidly. So, if that scenario sounds familiar, it might be time to start thinking about widening your horizons. Crunch the numbers on different types of dwellings, in alternative locations, at a variety of price points. Have you considered another region? Have you looked at buying off the plans?
❝Crunch the numbers on different types of dwellings, in alternative locations, at a variety of price points❞
There's Good News
The good news is that the properties which do come onto the market often have motivated vendors. Those vendors haven’t got the luxury of waiting to see what happens, for some reason. Could be they’re moving cities or going overseas, could be a landlord who can’t take the stress of a run-down property any longer, could be a developer or trader whose core business is selling houses, not holding onto them. For those people, the timing is irrelevant. They’re going to sell. And you can negotiate – there are deals to be made. That’s one bit of good news.
The second piece of good news is that you could have less competition this year. I know that contradicts the idea that there’s more competition for the remaining listings, but across the market it looks as though there will be fewer property investors purchasing – at least as long as all these legislative issues around methamphetamine, warrants of fitness and landlord responsibilities are still up in the air. And of course, foreign buyers are more restricted in the market as well as money being hard to get out of China for the time being. You may have the chance to buy rentals that other landlords can’t face renovating, and on the less obvious investment properties there should be less competition. Similarly, anything really pricey but specifically investorfocused should be good negotiating fodder with the current LVR restrictions.
I think there are going to be some outstanding deals in new builds and off-theplan. Building companies don’t have the luxury of waiting years for the market to be exactly where they want it. Developers want off-plan sales so they can get funding to complete their projects. And after all the push for new builds, there are a lot of projects being finished this year that will represent excellent buying in many cases. The new build properties are so much better than the old stock in terms of liveability – tenants love them, they’re low maintenance and there’s nothing to worry about in terms of rental WOFs or any of that carry-on. With a strong push to improve New Zealand’s general standard of housing stock, why is it taking so long for people to switch from crapped-out do-ups to newer builds? The cost of construction is so high that renovation has never been less affordable.
If you only do one thing this year, my advice for your property finding is to run the numbers on a wider range of properties – it may reveal a new strategy that will help you adapt to the changing market.
The Property Factory is a licensed Real Estate Agency that specialises in investment listings across New Zealand and Australia. Owned by Real Estate Investar, a publicly listed business on the Australian Stock Exchange, our mission is to provide property investors around the world with the best advice, guidance, products and services to enable them to create wealth through property investment. Campbell Venning has been investing in property for over 20 years and is the Head of Property at The Property Factory. He can be contacted at [email protected] or on 021 515 085 Contact: [email protected]