Taupō district housing market slowing down despite record median price

Professionals Lakeland Realty principal Ross Harvey. Photo / Supplied

While the Taupō District hit a record median price in February, experts say the market is actually cooling.

Last weekend, Professionals Lakeland Realty had two houses to auction and both got passed in. Principal Ross Harvey says this is the first time in four years property has not sold at auction.

"We are now experiencing a transitional market where house prices and sales volumes are coming down off the incredible peak of the past few years," Ross says.

A Real Estate Institute of New Zealand report for February says the median sales price for the Taupō district increased by $5000 to $850,000 from January. That is up $160,000 from January 2021.

Ross says the figures give an inaccurate picture because in February there were more homes sold at the upper end of the market. Year-on-year sales volumes were down: in January 2021 there were 88 homes sold and in February this year, 70 houses sold.

"The Taupō real estate market began to slow down in November."

Ross says if you drive around town you will see "for sale signs everywhere".

"We've swung from a lack of stock, an abundance of buyers and the ability to access finance, to an abundance of stock, a lack of buyers and difficulty getting finance."

Professionals Lakeland Realty principal Ross Harvey. Photo / Supplied

Ross says real estate agents should be having hard conversations with prospective vendors who "may have unrealistic expectations based on the upward trend in house prices over the past few years".

Sellers tend to be from a range of areas, including investors who are selling off their rental property and putting the money into the bank.

However, Westerman Property Solutions director Ben Westerman says his company has not experienced a mass exodus from rental property investors and sales in the past 12 months have been about capital gain.

Changes to the investment property market have deterred new investors from entering and for the first time in a decade their rental property portfolio has not grown, he says.

During the first lockdown in March 2020, there was a large migration from Airbnb to long-term rentals. Now the international borders are going to reopen, some of Ben's customers are talking about switching back to Airbnb.

"It's still a tight market for rentals. When a tenancy ends, it's not uncommon for the reappraisal to come in at $700 per week, rents have gone up 30 per cent in the past year."

Westerman Property Solutions director Ben Westerman. Photo / Supplied

When it comes to real estate trends, Ross says the regions tend to follow what is happening in Auckland, and he points to Auckland's largest real estate company Barfoot & Thompson where the weekly auction attendance started to fall away in mid-November, "to the point of near-empty auction rooms".

Prices in the Taupō real estate market have climbed 30 to 40 per cent since 2018 - but Ross says a change will come very quickly, and points to the 1987 sharemarket crash.

He predicts a big correction in the local real estate market due to "the yawning gap" that has developed between what a prudent buyer will pay and inflated expectations of a property owner.

There are still real estate opportunities to be had. Ross expanded the former Harvey's Group in tough times and says people will still need to sell houses.

For buyers who find themselves in a negative equity situation, Ross' advice is to hang on tight.

"Equity lost over 18 months to two years will come back, but not overnight."

As for the war in Ukraine, the international borders opening in May and the pandemic, Ross says how these will affect the real estate market all comes down to how they affect consumer emotions.

"Whatever adversity is around, at all costs we have to remain positive in our outlook and expectations, for our own sake and for our customers."