The new market reality

Real estate leaders on what buyers and sellers should expect in the coming months.

Carey Smith CEO of Ray White

The residential property market during the last quarter of 2018 showed quite strong seasonal trends, with sales numbers lifting during October and November and a reasonable sales month in December.

The number of listings that have come onto the market has given buyers a good choice and while prices remain relatively consistent, the supply of buyers have held up the sales numbers. In the regional areas, there has been a significant lift in listings and prices. As we move into 2019; the first months have been similar to the previous 12 months where buyer and seller confidence has remained consistent.

The Reserve Bank continues to hold interest rates at a low level, and it has indicated that these will remain in place at these levels for an extended period. There has been noted competition between the banks, that are now offering a sub four percent rate for borrowing up to three years. While the LVR requirements are still part of the purchasing process, these have been lowered and this has allowed buyers to assess individual properties at more affordable lending rates.

In the area of property management, most of the legislative change has been applied. Yield across most of the capital cities continues to increase, with vacancy rates sitting at historic low levels. These dynamics in the area of property management will continue.

Overall, buyers and sellers can have confidence that the market will remain positive for both sides. There is ample stock on the market to provide buyers with choice; and where sellers are offering value, they can expect a sale in a reasonably short period. Peter Thompson Managing Director of Barfoot & Thompson While the traditional home is and will remain the most common form of home, a trend that will gather pace throughout 2019 will be the growing move to apartments, town houses and terraced housing.

Offering lower prices, low maintenance, minimal gardens, and close proximity to transport corridors and retail/entertainment centres, this form of living is becoming increasingly popular across all age groups and family sizes. It is proving particularly popular with mortgage-free home owners who want to release some of the capital in their current home but at the same time continue to live near the city centre.

It’s all part of people accepting the realities of living in a rapidly growing, large city where land prices make up the bulk of a house’s price, and the lifestyle benefits of easier commuting.

For the past few years, Auckland property sales have plateaued at all-time record prices, and this has led to sales numbers becoming subdued and the marketing edging towards being a buyers’ market. The market is likely to stay this way until the end of spring.

Vendors who are intent on achieving a sale need to recognize this in terms of the price they are prepared to accept.

While sales prices are showing signs of softness there are no indications that prices are poised to move downwards significantly. What I anticipate is stable prices and a gradual rise in sales numbers – in part caused by the buyers’ market but also by the move to adopt the lifestyle offered by the new style of housing.

There are certainly enough new developments in the pipeline to give those contemplating a lifestyle change a range of options.

Mike Bayley Managing Director of Bayleys Corporation

Auckland’s residential property market is now like the weather pattern that prevailed over the region for the early part of this year … stable and constant.

Unlike the temperature though, the heat has gone out of Auckland’s residential property market – with a paradigm of subdued level-headedness much to the fore.

I believe these market conditions are likely to remain in place over the coming months. The fundamentals of the Auckland residential property market are still robust. Net immigration numbers, while down from their peaks, are still healthy. The Reserve Bank’s Official Cash Rate remains at a low level – reflected in the availability of mortgage borrowing rates of below 4 percent. And employment is close to an all-time high.

Add to this the relaxation of loan-to-value restrictions which came into effect on January 1, and the foundations of the market are sound. What we are seeing, is that more first home buyers are entering the market as they realise the affordability gap of income to mortgage serviceability is edging closer.

Meanwhile investors are becoming selective in what they are putting on their “shopping lists”. With capital growth off the menu for the next couple of years, and a capital gains tax firmly on the Government’s policy agenda, yield is a predominant factor in many purchasers’ pricing calculations.

Price-wise, I think we will continue to see a sideways drifting of values. As ever in a stable market, vendors with realistic price expectations will achieve sales.

With the heat now gone from the Auckland residential property sector, we are seeing a greater number of properties being marketed by negotiation or with fixed price values – rather than at auction, which was the preferred method of selling when the market was hot, and buyers outnumbered sellers.

Jo-Anne Clifford Chief Operations Officer, Harcourts International

Here at Harcourts, we are full of enthusiasm and excitement for the year ahead.

Although figures for the Auckland housing market for the end of 2018 didn’t finish on a high, there is huge optimism that 2019 will herald great results for those who are on the move.

Nationally, the average house price in January 2019 increased 2.59 percent from $554,016 in January 2018 to $568,391. However, in Auckland, the average house price fell 10.15 percent year on year, and now sits at $840,825.

In Auckland written sales for January 2019 fell 15.09 percent from 285 to 242 year on year and the number of properties currently listed with Harcourts is down 8.59 percent, from 1757 to 1606, for the same recorded period.

However, the shortage in stock at the start of the year means that some vendors may have less competition, giving them an advantage when it comes to selling their property.

Josephine Kinsella Managing Director of LJ Hooker & Harveys Group

This year the property market hit the ground running, with a high number of listings coming to market earlier than usual. We’re shifting to a buyer ’s market, and vendors want to jump on the opportunity, particularly with banks’ responsiveness to lending.

Naturally, as the market adjusts, some listings are lingering one to two weeks longer. This is partly because buyers are now spoilt for choice compared to last year, when many had to make rushed decisions. The vendors who are selling their properties quicker are working with offers, addressing any price adjustments promptly or marketing with an auction campaign, which continues to be a strong process to draw offers if not on the day then within a short period afterwards.

Property prices have levelled across most regions especially in Auckland; and with record low interest rates, first-home buyers are making their way back into the market. On the other hand, investors are starting to exit the market off the back of changing regulations, new legislation and the possibility of a capital gains tax being introduced. It’s expected that this will lead to a potential rental shortage in the next eight to 12 months.

In some rural areas, the market is seeing a decline in property values. It will be interesting to see how these areas are further affected by Government activity and climate during the coming months.

New Zealand’s first quarter is stable and steady, and we are not experiencing the volatility we have seen across the Tasman.