Lodge Real Estate’s managing director, Jeremy O’Rourke, said the Hamilton residential real estate market can be characterised by one word: paradoxical.
“In the real estate market, a common adage is that ‘price follows volume.’ What this means is that, historically, as buyer activity tails off and the number of house sales fall, prices will steadily decrease.
“But, what we have at the moment is that buyer activity during February and March was much lower than the same months in 2013 and 2012, yet Hamilton’s median house price continues to rise,” he explained.
Mr O’Rourke said any given March normally has the highest number of sales than any other month of the year.
However, there were only 257 sales during March, when the past two years were 275 in March 2013 and 265 in March 2012. There were only 193 sales in February, when the past two years were 247 in February 2013 and 245 in February 2012.
“Despite these lower than expected sales volumes, Hamilton’s median house price held steady at $375,000 in March, up from $327,500 in August last year” explained Mr O’Rourke. These numbers were released this morning by the Real Estate Institute of New Zealand (REINZ).
Mr O’Rourke said if the Reserve Bank lifts the loan-to-value (LVR) restrictions imposed in 2013, as it has indicated it may, this move could help realign volumes with prices.
“First home buyers have pulled out of the market in large numbers. Those extra sales we were missing in February and March can be attributed to this group of buyers being absent. If LVR restrictions are lifted, I predict we’ll see the market realigning and price following volume once again,” he said.
Mr O’Rourke said regardless of whether LVR restrictions are lifted in the near-term, he expects the number of first home buyers entering the market to steadily increase over the coming months. “Many first home buyers are slowly finding innovative ways to finance themselves into their first home, including tapping into the goodwill of parents and grandparents.”
Meanwhile, he said house sales at the top end of the market are very strong, with quality houses fetching top dollar. “Buyers view Hamilton as a high value market and we’ve been surprised by the strength of sales in the over $600,000 end of the market.”