Do you buy or sell first?

Wow you thought buying your first home gave you a workout, wait until you buy your secondhome! There’s twice as much to think about, this time round as you’re not just buying but also selling. To make matters alittle more interesting, matching those possession dates so that all parties involved moving schedule coincide can also add to the complicity.

You only have two options – buy first or sell first. Both scenarios have pros and cons.

Selling first has lots advantages. For starters, you’ll know exactly how much you’ll net after your sale is complete which will help determine the price range you reinvest into. Selling first will also enable you to make a much stronger offer as you won’t have to make it conditional upon selling your current home.
On the downside, you will only have a limited amount of time to find your next home unless you decide to rent. As a result, you may settle for something that’s less than perfect or paying a premium for a property that has everything you want but that’s over priced. You may also have to be flexible when it comes to moving dates.

If you’re buying a very specific property that only comes up once in a while, you may want to consider buying first and arranging a longer settlement so that you have lots of time to sell your home. Of course the pressure well be on so you’ll want to price your home at a price that will attract lots of buyer interst immediately. Arranging some additional finance can also give you a bit more flexibility for the settlement.

The market will help you determine whether buying or selling first is your best option. In a buyer’s market when there’s lots of selection, people generally prefer to sell first so that they have a bit of breathing space. In a seller’s market when homes are harder to find and go quickly once they become available, it’s preferable to buy first. One thing’s for certain though, get some professional advice from the team at Bayleys real estate before you make the decision.

Barry McKean
Bayleys Residential Specialist

Preparing For a Successful Open House

When you’re preparing your home for an open house, do a walk-through each room. Place things such as photos and items that have sentimental value but don't add to the decor out of sight of buyers. Reading material and other things that tend to make the room look cluttered are also better kept tucked away.

This will also make prospective buyers feel less like they are intruding into someone else's home. Rather, they’re more likely to feel as though they are going through THEIR new home. Shallow, wide boxes that fit under the bed are great because they can be stored out of sight. Items placed in them are easy to locate: there's no need to dig through a deep box to find what you are looking for once your home has been sold.

If the plants in your garden aren't flowering at the time of the open home, go to the supermarket and purchase enough flowering annuals that can be set among the greenery of your flowerbeds to give the impression of a blooming garden. It may just be that the open home falls at a time when your plants are not at the right stage to bloom. Flowering annuals are just a suggestion but set the stage well for first impressions. Of course, make sure the grass is cut the day before the open house.

It’s amazing what a difference a coat of fresh paint can make to improve the appearance of a room. It will not only look better but it’ll smell better too. Some strategic painting outside can also make a difference far beyond the effort and expense involved.....something to think about.

Baking bread or biscuits just before the open house will leave a pleasant aroma that will remind people they are in a "home" rather than a house. Remember, the sense of smell is a powerful tool which can work for or against you.

Finally, you may choose to have on offer some tasty treats while prospective buyers are viewing your home. It's surprising how your property will stand out with this point of difference if buyers are looking at a lot of other properties on the same day.

Barry McKean
Bayleys Residential Specialist

A shortage of houses?

By ANZ chief economist Cameron Bagrie

There’s no shortage in housing across the country. Rising migration and population growth mean current consent issuance isn’t keeping pace with demand, but there is enough excess supply from previous years to cover the imbalance.

Regional data reveals excess demand intensifying in Auckland, but areas outside of the main centres have an overhang of supply. There is widespread talk of a shortage of housing, and this has been used as one justification for house prices moving up. ANZ believe that much of the commentary in relation to the housing supply misses a key point in terms of the housing market correction. This cycle is concentrated as a land price adjustment as opposed to a physical housing story. The majority of the price appreciation of the boom appeared in the former, and while land may be in a limited supply in Auckland, this is certainly not the case nationally.

But, ANZ nonetheless feel the need to respond to the analysis presented in relation to the housing supply, particularly to it driving up housing prices and creating a “mini-boom”. Building consents have collapsed to levels last seen in the 1960’s. The number of dwelling consents issued in the last three months ran at a rate of 14,000. Yet, net migration has accelerated to an rate of 26,400. Throw in a population growth of around 35,000 a year and applying the average household size, suggests there is a demand for over 20,000 new dwellings over the next 12 months.

Based on this it’s easy to see that an excess demand situation for housing. On the face of it, it would apply an upward pressure on house prices. Indeed there have been anecdotes lately that new listings have been getting scarcer. The rebound in the number of house sales has resulted in a lower market ‘inventory’ from the equivalent of over 12 months sales at the end of last year to less than 8 months currently.

So are we really heading for a housing shortage crisis? To answer this, it’s important to distinguish between the flow and the stock. Based on recent flows, there is no doubt that excess demand exists, but we need to take into account the fact that this comes after several years of excess supply.

The upshot - there is no housing shortage nationally. A simple snapshot of one year of demand relative to supply is too simplistic; you need to look at the cumulative picture over several years. There has been enough excess supply in the past few years to absorb the rising demand for housing in the short term.

So what about the limited number of listings? We suspect this is due to the broader de-leveraging dynamic across the economy. When you buy a property, the tendency is to trade up and typically take more debt. This is where altered lending appetites and reduced job security could be playing a role. In this environment, the bias is to stay put. In practice this should influence supply (listings) and demand (the decision to buy). Hence, we shall be paying close attention to prices, which should remain capped if this dynamic is at play.

Bary McKean
Bayleys Residential Specialist

Mortgage borrowing strategy

by ANZ chief economist Cameron Bagrie

While the housing market is recovering, it is off remarkable lows, and in itself is insufficient to alter our favoured borrowing strategy – which is being patient and taking advantage of low six month rates.

Our view is that aggressive competition for deposits is keeping pressure on borrowing rates. With the Rerserve Bank of NZ ‘telling’ banks to get more funding in place, there will be two broad consequences.
First, competition for deposits will remain intense, particularly for term funding. This will keep the curve steep. If depositors are being rewarded, then of course, the borrowers have to pay.

Second, this will remove the temptation for banks to fund aggressive demand for credit by issuing short-term debt, as was the case during the previous upswing. Reduced fuelling of the housing market via aggressive credit demand (and supply) should reduce the need to raise the Official Cash Rate as aggressively over the next cycle.

Collectively, these are key structural issues that impact heavily as we weigh up the relative attractiveness of different borrowing rates.

In this environment, coupled with intense political pressure that is being placed on the financial services industry, we maintain our bias towards short-term rates, the six month rate in particular.

Barry McKean
Residential Specialist

Benefits of Instant Email Notification

The Internet has changed the way many people live their lives, and the process of buying a home is no exception. Buyers previously visited real estate offices and thumbed through large book of homes or brochures to find out what’s on the market. Today, its instantly updated online.

Prospective purchasers generally filter in their preferences and browse through a variety of homes. However this can become frustrating though as subsequent searches force you to sift through homes you’ve already looked at just to discover the latest ones that have hit the market.

Many agents now offer a service that emails you properties which match your criteria so you won’t miss out on your dream home. Although there’s no obligation, it’s best to stick with one agent in order to build a strong relationship so they'll be better able to understand your needs.

It’s important to get acquainted with the market so you’ll be confident enough to move quickly when your ideal home finally comes along. You’ll want to provide your agent with a detailed list of criteria that clearly specifies your needs and wants -- Such as:

- What style of home do you prefer?

- Are the schools in the area important to you?

- What’s more important: the type of home or the location?

- What are the minimum number of bedrooms and bathrooms?

- Does the house have to be in ‘move in’ condition or are you prepared to fix it up?

It’s important to establish a good strong line of communication with your agent so they’ll be in tune with your likes and dislikes. Be sure to provide feedback when you receive property updates as it'll help your agent better understand your preferences. It’s a gut wrenching feeling to miss out on the ideal home due to miscommunication so make sure you're on the same page.

Finding the perfect home isn't always easy but the right system and clear communication will make it much more enjoyable! If you know of someone who's house hunting, have them drop me a line so I can send them full updates of homes that match their criteria as soon as they hit the market! Instead of playing the frustrating game of telephone tag, they'll be able to sit back and enjoy the process.

Barry McKean
Bayleys Resisential Specialist

Residential Market Holds Firm

The residential real estate market has held firm in the past month with July prices and turnover tracking June figures almost exactly in the latest statistics released by the Real Estate Institute of New Zealand (REINZ) today.

For the first time, the Institute’s data this month is accompanied by the REINZ Monthly Housing Price Index, a new stratified housing price measure which gives an average of sale prices for common groups.

The Index was developed with the Reserve Bank of New Zealand and Institute president Mike Elford says the addition of these statistics will give an even more accurate analysis of house price movements at different price brackets and therefore a more complete overall picture.

“The better data we have, the more credible the information.”

July’s median house price of $340,000 is the same as June 2009 and also identical to July 2008. It is just marginally down on the $345,000 in July 2007 and well up on the median prices for the years 2000 through to 2006 which ranged between medians of $170,000 to $312,500.

Volumes have been similar too with 6,014 properties sold in nationally in July 2009 compared with 6,040 in June. This figure is well up on the 4,489 sold in July 2008.

“The market has certainly recovered well from the lows of mid-2008,” Mr Elford says. “You wouldn’t call it brilliant, but there are positive signs such as more listing stock.”

There were no significant shifts in the numbers of homes sold regionally although the Wellington market was a little sluggish with 618 sales in July 2009 compared with 674 in June 2009. Manawatu / Wanganui by comparison increased sales from 300 to 328 in the same period.

Another positive sign of recovery is the length of time to sell a property.

In July 2009, the median number of days to sell a house nationally was 37. This compares with 58 days in the corresponding period in 2008. The figure for June 2008 was 41. The number of days dropped sharply in Southland from 49 days in June to 35 days in July. Northland dropped from 72 to 51, Waikato / Bay of Plenty from 56 to 47 and Otago from 55 to 40.

Individual markets have their own stories to tell.

Mr Elford says the 4.51 percent increase in median house prices for July 2008 to July 2009 in Auckland (from $421,000 to $440,000) is a sign of an improving market.

There was significant growth in Southland with a 10.46 percent jump from a median house price of $172,000 July in 2008 to $190,000 in July 2009. A good increase was also seen in Taranaki which rose 5.69 percent from July 2008 to July 2009 with median house prices going from $265,000 to $280,100 – a sign of regional business confidence, Mr Elford says.

Bucking the positive trend was the Central Otago Lakes district which fell from a median of $565,000 in July 2008 to $411,000 on July 2009 – a drop of 27.25 percent.

“This is probably a flow on from the international economic markets. Foreign investors tend to liquidate property investments in Queenstown as a result of the global recession,” Mr Elford says.

From a price band point of view, there has also been little movement from June to July. Around the same numbers of homes sold in the under $400,000, $400,000 to $599,000, and $600,000 to $999,999 brackets but there was a small slump in the $1 million + segment from 161 homes sold in June to 125 in July. This is still a better performance than July 2008 when just 109 properties over $1 million were sold.

Mr Elford believes the consolidation seen in the market over the past few months will continue with more stock being listed.

“I think we’ll see some improvements with the seasonal adjustment going into the spring months,” he says.

Residential Highlights Manawatu/Wanganui

The median price for a house in the Manawatu/Wanganui district was up at $224,250 in July (June 2009: $221,750; July 2008: $233,750). 328 houses sold in July, up on the 300 sold in June (July 2008: 230).

The median sale price for a house in Palmerston North City increased to $277,000 in July. (June 2009: $270,000; July 2008: $272,500). 134 houses sold (June 2009: 126; July 2008: 112).

Sales volume was up in Manawatu Country with 31 houses sold (June 2009: 20; July 2008: 25). The median price rose to $220,000 from $209,000 in June (July 2008: $235,000).

The median sale price in Manawatu was up at $246,500 in July (June 2009: $240,000; July 2008: $260,000). The number of sales was up with 243 houses sold (June 2009: 220; July 2008: 165).

60 houses sold in Wanganui City in July, up from the 58 sold in June (July 2008: 44). The median price was down at $164,000 from $172,500 in June (July 2008: $187,500).

The median sale price in Wanganui increased to $175,000 in July. (June 2009: $172,500; July 2008: $185,000). 85 houses sold, up on the 80 sold in June 2009 (July 2008: 65).

The market optimism is great and just seems to get better which is brilliant for our home owners. This level of positive media reporting is continually reestablishing the much needed confidence in the New Zealand public that Real Estate is a sound long term investment.

Barry McKean
Bayleys Residential Specialist

Selling - The small things make all the difference

It is important to realise that buyers never negotiate a price for a home and then decide if they want to live there. Before price becomes a relevant issue, buyers will decide if they like the home and whether or not it suits their needs.

It is often the smaller things that make the difference when you put your Palmerston North property on the market. Real estate salespeople will advise on where to focus your efforts. Below are suggestions on how to prepare your property for sale and maximise your return on your property.

11 WAYS TO MAXIMISE YOUR RETURN

1. Remove the clutter. You end up walking through tracks of furniture in living areas that make the house feel hemmed in and small. Be ruthless and get rid of all the non-essentials. You are not only preparing for a move in a few months' time, but aiming to show your home off to its best advantage.

2. Fix and remove any signs of water damage. Even if you remedied the situation several years ago, tell-tale water trails give buyers the perception there's still a problem.

3. Clean the exterior with a high-pressure waterblaster and create a good impression from all aspects. There's often one side of the house that doesn't get the sun as much as the others.

4. Make outdoor areas appear inviting. More people see value in houses that offer outdoor living on terraces, decks, balconies and in courtyards. Spartan neglected outdoor living areas are unwelcoming.

5. Tidy and mulch garden areas. Neat landscaping is really important, particularly around outdoor living areas. It makes as much impact as kitchens and bathrooms.

6. When selling a new home, buyers like an up-to-the-minute kitchen and bathroom. However, if people are buying an older home with a view to improving it themselves and adding value, as long as these areas are serviceable, they're fine. Don't bother putting a new bench in an old kitchen.

7. Musty areas need to be well-aired and dehumidified before the open home. Burning a perfurmed or citronella candle in the musty area can help get rid of odours. Bunches of fresh flowers and bowls of fruit add colour, perfume and impact.

9. Clever buyers will check behind the curtains for mildew. Get drapes dry-cleaned and spruced up ready for the open home.

10. If you're unhappy with your furniture or art, then consider renting. It's a smart thing to do and more and more people are taking this option when selling. Several companies offer attractive furniture, accessories and art for short term hire. They can style your home to maximise its impact during the open home period. Talk to your agent for details on these companies.

11. Put the brightest light bulbs you throughtout your property-to make it bright. This can make a huge difference to the appeal of the property.

Presentation is essential. It is vital that you make a lasting impression in the buyer's mind.

Barry McKean
Bayleys Residential Specialist

When is the best time to sell

Everything has a season – including selling your home. Listing at the right moment could mean more money in your pocket.

Traditionally, spring/summer are the hottest seasons for real estate, with sellers energised by the warmer weather and gardens are looking fabulous with new growth making it a great time to show your home. At this time we see a larger number of properties coming to the market which is great,but prospective purchasers do have a greater selection to choose from.

If you decide to sell in the winter months there is a lot less competition and may get a better price. Another plus is buyers in winter are less likely to waste your time or draw out the settlement.

Of course, there is no perfect date or time of the year to sell as there are always purchasers - people transferring,marriage, separations, immigration etc.

The best advice is you should pay attention to your local housing market and try to list during a seller’s market, when there will be more competition among buyers for your home – which can mean a premium price, a quicker settlement and fewer conditions on the offer.

This is the window of opportunity we are in at present - A SELLERS MARKET

With Banks starting to how signs of increasing their interest rates this week, I am sure will also start to influence the urgency of buyers.

However with spring just around the corner things may change to a more balanced market rather quickly.

Barry McKean
Bayleys Residential Specialist

Confident Palmerston North Market

The Palmerston North property is again establishing itself as a great place to purchase homes. Prices are soaring up, with an average home now costing buyers about $294,000.

That's an improvement of $30,000 from the latter part of last year, when the median sale price for our city had dropped to $261,500.

Those of us whom work in the industry have been seeing this recovery for some time and these new figures from Quotable Value confirm this.

This trend is not just isolated to Palmerston North but is nation wide with houses prices increasing again by 0.7% in July for the third consecutive month.

With the media at last reporting a more positve note, Im sure this renewed confidence will result in seeing more properties coming to the market in the next few weeks.

Barry McKean
Bayleys Residential Specialist

Private sales good strategy or not?

I understand why people will give it crack selling privately,and in most cases its to save on paying an agent commission.

But the question is "is this the best strategy?" Generally people start by putting a sign out the front of their property & then list on the trademe website. Some people do manage to sell – others start to get annoyed very quickly with tyre kickers or ridiculously low offers. Even those that did sell, you have to ask the question – did they end up getting the very best price possible for their property.

For those whom manage to sell did they save money or did it cost them in thousands $$$ by not getting the best price the market had to offer. Our aim at Bayleys is to always achieve a premium price for your property,exposing it to a broad audience then creating a competitive environment from those interested buyers.

At present properties are selling within just a couple of weeks(Buyers are generally more interested in property new to the market)this is all done with the minimum of stress and with vendors ending up with more money in their pockets – even after paying a commission.

Anyway – let me ask you – when people look at buying a used car privately, what do you think there expectations are – that’s right they are looking for a bargain and not to pay the best price.

THE SAME APPLIES TO REAL ESTATE

Barry McKean
Bayleys Residential Specialist

Good times for home sellers

The local Residential property market in Palmerston North is humming along at an unprecedented rate. The number of home sales at present are really only being hampered by the lack of available new properties to sell.

Our current market conditions are definitely somewhat different to that of just 12months ago where the supply of properties for sale outstripped the number of buyers however today demand for properties by purchasers now exceed the number of properties available.

My take on the market as it stands and to get some real fizz going, is we now need to see more properties in the price band from 250k - 650k. The reason is simple at present potential purchases have little or no motivation to move as they have nowhere to move to.

The residential property market is like a big Ferris wheel we all need to get back on and have a good time.

The more homes that come available in the mid range the better for all concerned - those with lower priced home have something move on too which in turn installs confidence in the upper price ranges and developers of new home packages.

Whilst the current conditions remain sellers are having a field day with many property sales exceeding vendors expectations through multiple offer situations.

My advice is if anybody was considering selling the time is now and make the most of the large number of buyers available.

Barry McKean
Bayleys Residential Specialist