As we approach the halfway mark of 2022, it won’t be a surprise to any to hear that there has been somewhat of a shift in the Dunedin property market since our last update. I do believe it’s important to put things in perspective though as the media tend to dramatise the situation, in either direction, and often Dunedin is not at the forefront of considerations when national statistics are released.

So what exactly have we noticed in the past 6 months? Well, the CCCFA Responsible Lending legislation which came into effect on December 1st 2021 has predominantly impacted first home buyers the most and this, in conjunction with rising interest rates and inflation, has meant that the $400,000 - $700,000 price bracket has seen the biggest shift. I believe we have experienced approximately a 10% reduction with values in this range, over the first part of 2022, with maybe a 5% fall in the $700,000 - $1,000,000 bracket.

Interestingly enough, the higher end of the Dunedin market has appeared somewhat insulated at this point, with demand and competition remaining strong for homes above the $1,000,000 mark. My belief is that contemporary homes, or properties that have been recently enhanced, are seen as a good option by many in the current market due to the uncertainty around building costs and applicable timeframes. Many of our clients would love to purchase a section and build new but have understandably been dissuaded, at least until supply chain constraints are remedied.

It's been forecast by many economists that house prices are likely to drop another 5-10% over the coming 12 months, which I believe is realistic nationwide, however I would suggest that the most recent government announcement last week relating to first home buyers, with regards to price caps/deposit requirements, should provide some increased confidence in the lower end of the market, which has been most effected up until this point.

To further put things into perspective, if we see an overall 15-20% downturn in the property market then this only brings us back to where prices were at the end of 2020/beginning of 2021, so surely not a catastrophe. There is also not a lot of land yet freed up in Dunedin and when the hospital rebuild does eventually get into full gear, I can see this putting pressure on supply and therefore a more major price correction seems unlikely.

There are still plenty of Dunedin homes selling and, after 16 years in the real estate industry, we had our best month ever in April for the number of properties sold, which hopefully illustrates that we’re doing something right. We have a real focus on making sure that our properties are positioned accurately in the marketplace, as there’s no doubt it’s very price sensitive now that there’s an increase in choice for buyers. Even though the median time on market is roughly 7 weeks, it’s still a possibility to transact quicker if a good advertising campaign is in place and this is of the most benefit to our clients, particularly when time is of the essence in this market.