Kapiti Market Update - March 2023

Taking a more longitudinal view of market behaviour helps us put the current “buyers market” reporting into perspective. If you glance at the graph below you’ll notice a couple of things…

• First, notice the dramatic increase in property prices between December 2019 and October 2021. Over the two years preceding October 2021, the Kapiti residential property market grew 46.9%
• It peaked in October 2021 and we noticed it on the front line. The properties at the bottom end of the market, and even those in the middle, started to sit (very few were selling) while the properties over about $1.3M were still selling much more readily. Because the market was split, the use of “median sale price” to report generally about “the market” can be quite misleading at this time.
• It’s been 15 months since the peak. In this time the market has dropped about 21% – an average of 1.44% per month. HOWEVER, if you track back 15 months prior to the peak, the median sale price had accelerated at a rate of 1.85% per month – an incredible 27.8% increase!
• So put simply, the rate of decline has not been as steep as the previous rate of increase when we witnessed the rapid price rises alongside the strong 5 year vendors market.
• The February 2023 median sale price bounced right back up to $855,000. Which again is a reminder that single data-points shouldn’t influence our decisions as much as the general trend.  Watch it come down again next month!
• It’s just a cycle.

Selling in a Buyers Market?

Headlines in the mainstream media in the last few days have read “Downturn in Housing Market Continues to Gather Steam” and “New Zealand Property Price Plunge Accelerates, Wellington Values Plummet Nearly 20 Percent in a Year”. There’s no buts about it… New Zealand, in general, has moved into a buyers’ market.

We recommend trying to be circumspect, however, when interpreting media reporting and when making decisions for yourself. Humans are emotional decision makers and headlines are designed to arouse emotions. Media simplification of complex phenomena like market behaviour can have people making emotional decisions without a full pros vs cons analysis.

Our opinion: Awareness of media commentary helps but the generalisations can be unhelpful.

Overall, house prices in Kapiti have softened, but houses are certainly still selling and many for respectable prices. Anecdotally, there is much variation in outcomes from one property to the next. Market behaviour is not as simple as the news makes out. Each house is different. So, while all voices seem to be reporting a “buyers’ market’, don’t let that intimidate you from selling. It must be remembered that a whet buyer appetite offers many opportunities for sellers. If you are thinking of selling, just know, your buyer is probably out there. And as always, if you are buying and selling in the same market, its really the net outcome that matters.

What truly matters, as agents, is that we help our clients to get the formula right. Every house can sell, if we work closely with our clients to ensure the property is smacking with appeal, gets in front of every suitable buyer and the price point is perfectly pitched. Price is a sensitive conversation, on both sides of the negotiation, but probably the most important. The agents at Village Real Estate work diligently on the appraisal process, and have robust and honest discussions with our clients, also considering the limitations in these analyses. We are intentional about the conversations we have with buyers about price, because the quality of the conversations influences the participation in, and the price of offers.