Lower interest rates could impact the Whanganui housing market

Whanganui East was the only suburb where the average property price rose over the past three months. photo / NZME

Better buying conditions are yet to impact Whanganui’s housing market but experts believe the scene is set for a bump in business.

This week most major banks had a two-year rate of 5.75% or 5.79%, down from an average of 7.38% in April.

OneRoof Editor Owen Vaughan said reduced rates had not resulted in a flurry in sales in Whanganui, with a 19% drop in August compared to the same month last year.

Sales figures last August were also low by historical standards so “you’ve dropped off a low base”.

“Like the rest of the country, I think people are still feeling the shiver of what has been a pretty brutal economic contraction,” Vaughan said.

“Being in a recession, out of a recession, that’s a technicality.

“It’s what you feel on the ground and people on the ground are doing it tough.”

However, the cut to the official cash rate (5.25%) had set the groundwork for a revival in price and sales growth, Vaughan said.

“That may come about in October and November.

“Nationally, we are definitely seeing more people at open homes and agents have told us they are seeing more pre-booking activity - vendors getting them in to value their house.”

Property Brokers Whanganui branch manager Ritesh Verma said the median sale price had bounced between $400,000 and $480,000 in recent months.

“A well-priced and well-marketed property will still sell, and they are selling,” he said.

“Multi offers are back and so are backup offers. That indicates activity in the marketplace.”

OneRoof editor Owen Vaughan. Photo / Fiona Goodall

Verma said lower prices in Whanganui had led to renewed interest from out-of-town investors.

From July 1, those with residential investment property will not have to pay tax on any gains received if they sell it after three years or more.

Previously, it had been 10 years or more.

“We are seeing people sell portfolios now - anywhere between five and 10 properties.”

He said the average selling time in Whanganui was between 50 and 60 days, similar to nationwide figures.

“To be fair, if you overprice in this market, you are going to end up chasing the market down.

“Some need to adjust their price otherwise it becomes stale. Or, people start thinking ‘What’s wrong with it?’.”

According to OneRoof, the only Whanganui suburb that had a boost in average property value over the past three months was Whanganui East, which rose from $451,000 to $461,000.

St Johns Hill dropped by 4.2% from $693,000 to $664,000.

Vaughan said the average property value in Whanganui was $551,000, and the median sale price $460,000.

“It’s not a great news story but overall, lower interest rates will bring hesitant buyers off the touchlines and they’ll start to engage in the market.

“Agents are seeing a pick-up in activity but it hasn’t translated into sales or price growth yet.”

Bayleys Whanganui general manager Rachel Thomson said the Whanganui market was still in the recovery stage but there were positive signs.

“We are seeing a bit more motivation in purchasers and that‘s always good.

“When there is a lot of uncertainty it’s easy just to sit back and wait.”

She said there was a lot of interest in houses between $400,000 and $500,000, including many first-home buyers.

There were a lot of options on the market and that did not trigger buyers to move quickly with their decisions.

‘You’ve got that classic thing of ‘love this property but if we miss out there are four or five similar that still tick all the boxes’.

“As that that starts to turn over I think we’ll see a bit more of a call to action with some of the purchasers.”

Around 30% of buyers were from out of town, she said.

“People from those big centres are still looking to Whanganui.

“It’s very affordable in terms of the housing market and it also has a lot to offer as a city.”

Mike Tweed is a multimedia journalist at the Whanganui Chronicle. Since starting in March 2020, he has dabbled in everything from sport to music. At present his focus is local government, primarily the Whanganui District Council.