Interest steady in niche market
The number of property listings over $5m increased 56 per cent in February, but agents say it’s life as usual for luxury sales, writes Colleen Hawkes.
There is one sector of the residential property market that appears largely untouched by the downturn in prices, and that is the luxury sector.
However, that may change as more properties are listed. And there has been a big jump in listings this year.
Trade Me Property sales director Gavin Lloyd says there was a 56 per cent increase in February in the number of property listings over $5 million compared with the same month last year.
In February last year there was a 11 per cent increase in the total number of properties listed nationwide compared with the previous year.
But real estate agents who specialise in very expensive properties say the credit crunch is not having the same effect on their clients as it is on buyers at the middle and lower ends of the market. Graham Wall of Wall Real Estate in Auckland says he is finding nothing has changed. ‘‘Usually, when someone coughs, everyone gets the flu.’’
He puts the absence of panic down to several factors.
‘‘Some pretty smart people seem to think the safest place to have your money in slightly turbulent times is in prime residential real estate,’’ he says.
‘‘There are so few really beautiful houses in New
Zealand, and there are more buyers than sellers, so the luxury sector is not affected like the mass market. That does not mean as soon as you have a $25m listing you are going to sell it the same afternoon.
‘‘There is always a bit of a thought process for buyers.’’
The second reason Wall gives is that buyers are usually not at the mercy of the banks.
‘‘If someone is spending more than $15m, they are usually reallocating money. They are not going down to the bank saying, ‘I need to borrow $10m.’
‘‘They are generally selling a business or farm or another expensive property.’’
Gary Wallace of Bayleys Remuera says there has been a downturn across the board, ‘‘but it obviously affects society differently, depending on where you sit’’.
Wallace says sales are still very property dependent: ‘‘If you have a good property that appeals and ticks boxes for the buyers, there is still plenty of interest – be it at $2m or $20m.
‘‘Although there’s a bit of doom and gloom about, there are still plenty of people getting on with their lives. Life goes on and people are fairly pragmatic.
‘‘But it is true, depending on what spectrum you are operating, FOMO [fear of missing out] has changed to fear of paying too much.’’
Wallace says there is ‘‘good interest’’ following a recent deadline sale for a house that Bayleys is marketing at 120
Victoria Ave, Remuera. It has a rating valuation of $17.25m and a Homes.co.nz estimate of $19.2m.
NZ Sotheby’s International Realty managing director Mark Harris says there has been a bit of a dropoff in inquiries over the past three months across the board, but a large part of that was the usual lull from December through February.
‘‘People are getting back into the groove. While there has been a bit of a reset, there is not too much concern. There is still plenty of interest in the high end.
‘‘That end of the market is pretty robust – the Aussies are coming in again and New Zealanders are on the move.’’
Harris also says the luxury property market is less affected by an increase in interest rates.
‘‘We are staying on our toes and watching it carefully, but it hasn’t had much effect yet.
‘‘Properties in high-quality locations with views or a lakefront position are still attracting inquiries and interest.’’
Harris says much of that interest in Southern Lakes properties falls into the $14m to $15m realm.
Marketing a ‘stealth process’
Terry Spice of Luxury Real Estate in Queenstown says the firm has barely missed a beat this year. ‘‘We are certainly getting really good inquiries at the moment,’’ he says. ‘‘But there is a lack of premium stock, to the point where some people don’t want to go to market – they are keeping it silent but looking for a sale.’’
Spice says marketing for these vendors is a ‘‘stealth process’’. ‘‘It’s about getting a very qualified group of people to show through the properties.’’
The agent says the high-end market for local families in Queenstown is usually ‘‘capped out’’ between $5m and $6m, with buyers from other parts of the country looking in the $7m-plus price bracket.
‘‘The desirability to be down here is still very good. We have yet to test the Australian market, but we are hoping for a good winter for tourism, which always creates additional interest.’’