Review of the property sales market in the Motueka area

September 1
By Alan Atkins, Ray White Motueka

[Editor's note: Ray White Motueka has become the Principal Sponsor of Motueka Online, and one item of assistance it will provide is a regular, general update on the state of property sales in the area. The reports will not contain any promotion of Alan's company, but is provided purely for informational purposes]

Residential property sales turnover was the lowest for a July in a decade, and looking at the activity for August it looks like also being at an historic low. Statistics for the Nelson/Marlborough area show a similar trend.

Aggregated figures show that nationwide sales slipped from 4,575 residential property transactions in June to 4,411 last month, the lowest July total in 10 years. However, this is still higher than the record low of only 3,666 dwelling sales last January. (The highest number of residential property sales in July was 10,150 in 2003.)

Pricewise, the median price in the Nelson/Marlborough district decreased from $347,250 in June to $327,000 last month, which is also slightly down on the July 2009 median of $328,000. At 159, residential property sales are up on 150 in June, but fewer than the 228 in July last year.

In a recent publication, BNZ said it is consumer confidence and not interest rates that is driving the market, and in our opinion this seems to be very true locally. BNZ noted that none of us know when businesses or consumers will decide the future is "safe" enough that they will walk into banks looking for extra finance.

"When that happens we don't know to what extent interest rate sensitivity will be different from the past," BNZ said. "Actually if you think about those two sentences you'll realise what we are saying is that in the current very uncertain environment it is not interest rates which are the prime determinant of whether people borrow or not. That means interest rate rises being undertaken by the Reserve Bank are almost irrelevant. Almost, but not completely because rate rises do affect cash flows and as anyone who has operated a business knows it is usually dearth of cashflow which causes a business to go under, not the fact that their product or service is bad.

Looking at Ray White's own business, the number of properties we have listed is 30-40% less than for this period for both 2009 and the very poor year of 2008. This leads me to believe that unlike the slow year of 2008 when we had a good number of properties for sale but few buyers, the slump in the number of property sales this winter has been driven by a low number of listings. As local properties owners in mass seem to have decided to stay put, this is perhaps why our local properties have maintained their value when compared to the TDC capital values.

While there are a lower number of properties on the market at present, do not expect buyer pressure to push prices up. While there is a healthy amount of buyer interest around, they, along with their lenders, are very cautious when it comes to making offers for property.

Having said that, we expect a lift in property sales going into the spring as already over the last week we have seen an increase in the number of properties coming on to the market.

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