The December NZ Property Report featured here on Unconditional on New Year’s day highlighted that between November and December the asking price expectation of properties in NZ fell by 1.7% to $412,319. This fall had come off the back of a couple of stable months of price expectation.
At the time of writing that report, the assumption behind this decline in asking price was that the market was adjusting prices as a result of somewhat flat demand. This fall in demand was being seen in the much softer sales volumes through the last quarter of the year.
However another explanation for this decline was brought to my attention by Steve Taylor an agent in Christchurch who is a regular writer of a local real estate blog – Doctor’n the House.
His recent post “Why has asking price gone down?” highlighted the fact that with the commencement of the new legislation (Real Estate Agents Act 2008) real estate licensed sales people now have a legal obligation to provide a written appraisal for every house they propose to list on behalf of the owner. This appraisal needs to include an estimated market price of the property.
Whilst this change is in itself not vastly different from prior practices whereby a price level would have been discussed between agent and vendor – the view which Steve highlights and I tend to agree with is that this universal requirement is potentially driving a more accountable responsibility on the part of the sales agent to market the property at a price which is judged to be the market price.
Clearly the enactment of this requirement of the new Act has only been in operation for 8 weeks so it will be very interesting to see the coming months for signs of the movement in asking price of properties coming onto the market.
