Why the market may be better than you think

For homeowners contemplating a move, it can be easy to find reasons to wait.

Economic uncertainty, international events, an upcoming general election and mixed commentary around the housing market have all contributed to a sense of caution. Add headlines about subdued prices and hesitant buyers, and some would-be sellers could be forgiven for thinking the safest option is to sit tight.

But the underlying sales data paints a considerably less frightening picture.

Bayleys Head of Insights and Data Chris Farhi says while several events have contributed to uncertainty this year, their impact on actual property market activity has been more muted than perceptions might suggest.

International instability and the oil crisis created some hesitation through April and May, he says, but much of the market has subsequently “shrugged it off” as conditions stabilised.

The other potential source of hesitation is our upcoming election, and what a change in political direction could mean for housing.

However, Farhi says previous Bayleys analysis has shown elections tend to have the greatest impact on property activity when housing policy itself is a significant election battleground. But this time, he says the election conversation has been more heavily concentrated on issues such as the cost of living, education, healthcare and crime.

“Our overall view is that if you look at the actual market and where it is at the moment, there aren’t any fundamental issues that are really going to cause proper concern.”

Instead, he believes there is some “residual perception” among parts of the market that conditions are weaker or more uncertain than they actually are.

The numbers are less spooky than they look

Perhaps the clearest reassurance for homeowners is found in sales volumes.

Looking at sales activity over the previous six months, Farhi says volumes have averaged around 98 percent of those recorded over the corresponding period last year.

Individual months have fluctuated, with activity ranging from around 90 percent to as high as 103 percent of year-ago levels, but the bigger picture is one of relative stability.

“On average, 98 percent suggests that the actual activity is pretty much the same as last year,” Farhi says.

That distinction between sentiment and activity is an important one for anyone weighing up whether to sell. Buyers may be more selective and some may be taking longer to make decisions, but that doesn’t mean they have disappeared.

Farhi says any hesitation also appears to be concentrated within particular pockets of the market, rather than across the board.

First-home buyers remain active, while mortgaged multiple-property owners, a group which typically includes investors, have been more subdued.

Farhi says that makes intuitive sense.

“First-home buyers often have a life-stage reason for purchasing and can see an opportunity to make the most of current conditions. Investors, meanwhile, have greater discretion over whether and when they purchase and may therefore be more inclined to wait when uncertainty rises.”

For sellers, the important message is that there are still buyers in the market.

There is no perfect market

One of the traps homeowners can fall into is waiting for a perfect set of conditions before selling.

The problem, Farhi says, is that a “perfect market” doesn’t really exist.

“I don’t think there is ever a perfect time to be buying or selling in the market.”

A quieter market where prices are moving sideways comes with one set of challenges. But a rapidly rising market creates another.

Farhi points to 2021, when sellers may have enjoyed extremely strong demand for their properties, only to find themselves competing fiercely when it came time to purchase their next home. Buyers repeatedly missed out at auction, while some people who sold found prices moving faster than they could secure a replacement property.

Every market, in other words, involves a trade-off.

Rather than trying to perfectly time the cycle, Farhi says sellers can benefit from spending time in the market.

“If you are not in the market, then you’re basically going to miss out on that activity.”

There’s a steady stream of new buyers and there continues to be examples of multiple bidders at auction and multi-offer situations through deadline campaigns.

“Having that confidence to move forward and not spook yourself is really important.”

Preparation matters in a selective market

But that doesn’t mean sellers should rush to put a property online without doing their homework.

In fact, in a balanced market with plenty of listings available, preparation can become even more important.

Farhi says the first step is understanding what comes after the sale.

“If you’re looking to sell, you want to have actually gone into the market, see what you can buy, see what opportunities are in there, so you’ve got a really good understanding of what your next step is.”

That includes understanding what your existing property is realistically worth and what that allows you to do next.

Farhi says most New Zealand markets are not currently environments where homeowners should list on the assumption that an extraordinary outlier price will materialise.

“The market’s much more settled.”

That makes an evidence-based appraisal particularly important. An inflated expectation may sound appealing at the outset, but it can ultimately make the sales process more difficult.

“There’s no point in getting an appraisal that looks like it’s overmarket because it’s just going to make it a lot harder to sell.”

Presentation matters too.

With buyers enjoying a relatively good selection of properties, obvious defects, poor presentation or unresolved maintenance issues can give them a reason to move on to the next listing.

Farhi says clean, well-presented properties tend to perform strongly, while homes with defects or other issues can be harder to transact because buyers have alternatives.

Start talking to your agent early

One of the biggest mistakes a prospective seller can make is waiting until the property is almost ready to list before seeking professional advice.

Farhi recommends beginning conversations with agents well before the intended campaign date.

He says an experienced agent can help identify which improvements are likely to make a genuine difference and which may be unnecessary.

“That advice will differ from home to home. For some properties, maintenance may be the priority. For others, relatively simple changes to furniture, gardens, decluttering or styling could better showcase the home’s strengths.”

Farhi says sellers should think about what buyers are likely to notice during a viewing or in photography and address issues that could unnecessarily detract from the property.

The pre-sale checklist

So, what should every homeowner have sorted before the for-sale sign goes up?

Farhi identifies five fundamentals:

• Get a realistic, evidence-backed appraisal. Start with a genuine assessment of where your property sits in the current market. Pricing expectations should reflect comparable sales and current buyer behaviour rather than the result you hope the market might deliver.

• Identify and address defects early. Seek advice about anything that could become an issue for buyers. Check relevant property information and deal with maintenance or defects where appropriate before they become a distraction during negotiations.

• Get the presentation right. Look critically at furnishings, gardens, decluttering and general presentation. The aim isn’t necessarily to undertake an expensive renovation, but to ensure buyers can immediately see the property’s strengths.

• Build a strong marketing campaign. In a market where buyers have choice, simply listing a property is not enough. A well-designed campaign should create visibility, showcase the home at its best and give it the strongest opportunity to reach the right pool of buyers.

• Choose an agent you trust. The final piece is having an agent who understands the local market, gives realistic advice and is prepared to put in the work required to generate interest and negotiate a successful sale.

Don’t let fear make the decision for you

Waiting for stronger conditions may sound sensible, but stronger conditions can also mean more competition for the home you want to buy next. Today’s market offers buyers a relatively good choice and potentially greater negotiating ability. If activity strengthens significantly, some of those advantages may disappear.

“It’s like a double-edged sword.”

For sellers, the takeaway is not that every homeowner should rush to market. Personal circumstances, financial position and future plans should always drive the decision.

But neither should homeowners allow broad perceptions about the market to make that decision for them.

The better approach is to understand the market you are in, prepare properly, set realistic expectations and give your property the best possible opportunity to stand out.

Because sometimes the thing keeping a homeowner from making their next move isn’t the market itself. It’s being spooked by what they think the market might do.