Home truths
The year ahead for NZ property
New Zealand’s property market slid into 2019 with a distinct lack of energy.
Sales numbers plummeted in Auckland in December, Real Estate Institute figures show, and were down across the country.
What might 2019 hold? We asked four people with a stake in its fortunes to weigh in.
The agent
Niko Kloeten – real estate salesperson, Bayleys.
Former journalist Kloeten started his real estate career at the end of 2017.
The current market conditions are the best he has experienced in that time.
‘‘Things are selling well. It just depends on the property. Some stuff is getting no interest but anything that fits a niche is getting good levels of inquiry.’’
He says he expects 2019 to be a ‘‘year of change’’ for the property market.
‘‘First-home buyers will get more opportunities, due to subdued prices and less competition from investors. Big development blocks will be affected by a reduction in overseas buyer activity, a trend that began before the recent law changes.’’
His main worry was that some buyers and sellers had started to ask about what was happening across the Tasman, where prices have fallen significantly.
‘‘Several clients have asked me about the price drops in Australia, particularly in Sydney and Melbourne. My biggest concern is we talk ourselves into a downturn, based on headlines from overseas.’’
The first-home buyer
Tim Brown, Auckland
Brown wants 2019 to be the year he and his partner, Amy, buy their first home.
The parents of two children want a twoor three-bedroom home in Auckland for up to about $650,000.
‘‘More important than a bedroom each, is somewhere where we can leave the house and have some space. And an outlook for me ... I would be happy in a pretty stink house if I can sit in a chair, have a whisky and look at a view.’’
He doesn’t expect it to be tough to find a house but thinks it will take a considerable amount of time.
‘‘The trickiest thing is sorting out emotions and intentions. Like is this just for a secure place for our family to live, and we can get a puppy? Or is this supposed to be an investment? I looked last year but didn’t quite have the money sorted. It’s just a case of when it’s possible to try to do it.’’
The building firm
Matt Brown, Matt Brown Builders When Matt Brown decided to set up his own building firm in Northland a year and a half ago, he wasn’t sure he would have enough work. But within three months he was fully booked.
Brown, through his company Matt Brown Builders, works for private companies and takes contracts from building franchises. He said there was a lot of newbuild and renovation work around. Higher prices for existing homes drove people to new builds, he said, because the gap in price had become smaller.
Brown was optimistic about what the next 12 months could hold.
‘‘Last week I had three calls from people who have work lined up and the builders have fallen through on them. It tells me that people are stretching themselves too far.’’
Brown said his success and growth this year would depend on having a good name and sound business fundamentals.
The investor
Nick Gentle
Wellington property investor Gentle is expecting a good year for investors.
Rents should rise, driven by a lack of new housing, extra costs being put on landlords, an increase in population and general inflation, he said.
Gentle said he expected changes such as ring-fencing of losses, planned changes to the Residential Tenancies Act and the Healthy Homes rules, to mean the end of the ‘‘cheap rental’’.
Life should get easier for investors, he said, although borrowing would be a challenge for some – banks were now increasingly interested in how easy it was for borrowers to repay loans, not just how much equity they had for a deal.
‘‘As prices stabilise I think speculators chasing a quick buck will leave the market and most long-term investors prefer buying when the frenzy isn’t there.’’
People who were negatively geared would be affected by ringfencing of losses.
But Gentle said that was not insurmountable.
‘‘Investors in the same market as everybody else continue to uncover properties with good cashflow and equity potential. Experience matters and you can still do very well if you know your market and aren’t afraid to roll up your sleeves and get stuck in.
‘‘Rents are strong in most markets and you will usually get a good return on money spent on improving properties. It’s all about having a team of good people around you and helping each other.’’
Gentle said he could see opportunities to grow his own portfolio in 2019. ‘‘In the last few years I’ve bought large run-down homes, renovated, remodelled to house more people and rented them out. I enjoy bringing these back to life so I hope to find another project.’’