6 Signs Winter is on its way | NZ Real Estate

The Real Estate Cycle consists of four distinct seasons: expansion (Spring), peak (Summer) contraction (Autumn/fall), and trough (Winter). Each season presents unique opportunities and challenges for both buyers and sellers. By recognising the signs of each season, you can make strategic decisions to maximise your real estate investments.

The Four Seasons of Real Estate

Expansion (Spring):
During the expansion phase, also known as spring, everything is growing, and there are capital gains in property. This is a time of opportunity for buyers and sellers to make the most of increased property values and market activity.

Peak (Summer):
The peak season, or summer, is when the real estate market reaches its hottest point. This is the time when property values are at their highest, and sellers can make substantial profits. It’s also a time when buyers need to be cautious to avoid overpaying for property. This was seen in the market peak in 2021 and 2022, the demand was high, coupled with low-interest rates resulting in many people paying above the rateable value for homes.

Contraction (Autumn/Fall):
As the market moves into contraction or fall, property prices start to decrease, and the number of listings begins to rise. Buyers have more options, and sellers need to adjust their expectations to align with the changing market conditions.

Our opinion is that we are currently experiencing this phase in the New Zealand/Christchurch Real Estate Market.

Trough (Winter):
Winter in real estate marks the lowest point in the market cycle. Property prices are at their lowest, and buyers can find great deals.

This is a time for strategic buying, as the market begins to recalibrate for future growth. As 2024 progresses we see the market entering this phase, with property supply high and demand low it will be a great time to purchase as the market returns to a normal, healthy growth of 2–4%.

1. Buyers are cautious, and there are fewer buyers in the market
2. There is a significant gap between the vendors’ expectations and what buyers are willing to pay.
3. There is an increase in property listings and inventory.
4. Developers are releasing a significant number of properties, indicating an oversupply in the market.
5. The government has implemented cuts in spending, which will lead to an increase in unemployment and a slowdown in the economy.
6. Inflation is being controlled, which leads to a rise in interest rates and a decrease in buyer affordability.

Conclusion

We hope this article will equip you with analysing and understanding the real estate market. As mentioned, I suggest that the market is on the verge of a downturn, making it an opportune time to start considering buying and if you are looking to sell in the next few years, now is a great time before the market drops further.

This blog was originally published on najibrealestate. To read the full article read here

Author — Nathan Najib, Managing Director/Founder Najib Real Estate