Pump up the volume

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Wakatipu’s residential market has come through 2009 in far better shape than the slump of 2008.
Despite a year-end blip, the latest real estate statistics confirm the recovery.

Sales volumes for every month apart from July and December were up on the same month the year before.

The figures are a clear indication the property market is over the slump that hit it in 2008 for the Real Institute Institute’s Wakatipu spokesman Adrian Snow.

Prices themselves have yet to rise that much, but Snow says volumes always increase first.

Bargains have all but disappeared, and more than one buyer is now often chasing the same property, he adds.

The figures indicate the bottom of the cycle occurred last July, when property dwelling sales hit a 2009 low of 35.

The next month, dwelling sales lifted to 46 while section sales hit a year-high of 20 – compared with just one in
August 2008.

Section sales were hardest hit during the recession, Snow says.

“No one was building in the uncertain early phases of the credit crunch, and there weren’t any speculators.

“Now, however, locals are buying sections for building in the short- to medium-term future,” Snow says.

“There are also signs investment purchasers are returning to the market.”

Snow attributes last year’s higher sales volumes to increased buyer confidence and more realistic vendors.

However, buyers are still very selective, he says.

“They filter out over-priced properties on the internet before making themselves known to agents.”

Relatively low interest rates also help buyers, but on the flip side they now find it harder to borrow money, Snow says.

During the recession there was a lot of speculation the marketplace would collapse, but prices had come back no more than 15 per cent.

The only sector to collapse was the managed apartment market.

“But that was very obviously a bubble, so a level of correction was probably always coming,” Snow says.

The rural residential market is also in a state of correction, he says.

“Interest in lifestyle properties is still very strong, but vendors aren’t necessarily motivated to meet the purchasers.
“As a result, very few sales have gone through,” he says.

Snow believes the Government will give recommendations to tax residential investment properties serious consideration.

But he won’t be drawn on how that might affect the local property market.