$1 billion disappears from Auckland property market

The number of $1 million-plus sales in New Zealand has taken a hammering, with more than $1 billion disappearing from the property market in Auckland alone, new figures from OneRoof show.

OneRoof and its data partner Valocity compared sales volumes in the major metros in the 12 months to August 2019 to sales volumes in the 12 months to August 2018. The figures showed the gaps in the market and where the price brackets buyers were operating in.

In the 12 months to August 2018, more than 35 percent of sales in Auckland were for $1 million or above. In the 12 months to August this year that dropped to 32 percent or 1887 fewer $1m-plus sales.

OneRoof editor Owen Vaughan says: "But that’s not for want of buyers. Agents say buyers are desperate for properties in the upper price brackets, if only there were more vendors willing to list.

"The change in sales volume is even more dramatic in Auckland's inner suburbs, where sales over $1 million dropped from 57 percent of total sales last year to 44 percent this year. There were 2572 properties in the central suburbs that sold above $1 million in the past 12 months, down from 3336 the year before, a drop of 764 sales - which in money terms is at least $764 million that disappeared from the market.

"The most vigorous part of Auckland’s market is now in sales in the $500,000 to $1 million bracket. While city-wide volumes dropped 15 percent, from 24,656 to 21,096, sales in the affordable bracket dropped by only 8 percent. That so-called first home buyer and investor bracket accounted for 61 percent of sales in the last 12 months, up from 56 percent."

Vaughan says spare a thought for the premium end of Auckland's property market: "Last year fewer than 500 properties sold for more than $2.5 million, compared to 831 $2.5 million-plus sales the year before."

Bayleys Remuera agent Vicki Wallace, who with her husband Gary has racked up more than $1 billion in sales, says that while there’s definitely been a spring lift in the market, cautious vendors seem to be trapped.

"The mover market can’t identify their next move, as they’re not seeing a lot in the high $2m, $3m-$4m market,” she says. “So they’re not listing their low $2 million property to make the next move.”

SPRING OPTIMISM

Another Remuera agent, Gerard Charteris, of Ray White, agrees: vendors think there's not enough stock in the $2m-$3m “middle” market, so are holding on to their own properties and not rushing in.

He reports a significant lift in requests for appraisals and major growth in the supply pipeline, so is optimistic that spring will deliver the goods.

He has also seen big numbers of buyers looking at lower priced properties (in Remuera, that’s round the $800,000) so the number of sales haven’t dropped off.

A similar pattern is evident in New Zealand’s next most expensive market, Queenstown. There, the number of $2 million sales dropped from 95 in the 12 months to August 2018 to 66 in the 12 months to August this year. The gap was filled by properties in the $500,000-$1.25m bracket, which made up 75 percent of the sales volume this year, well up on the 62 percent in 2018.

In Tauranga, 50 percent of sales were between $500,000 and $750,000 in the 12 months to August 2019, compared to only 45 percent in the same period the year before, although sales volumes in the $1 million plus properties barely changed (around 250 sales both years). In Hamilton, volume dropped 6 percent to 3500 sales in the last 12 months, 82 percent of that for prices between $250,000 and $750,000.

Sales volumes in Wellington across the board also fared better than Auckland’s, dropping only 4 percent from 2999 to 2875 between years. Volume is mostly in properties selling between $500,000 and $1 million (around 1900 in each of the two years), while sales above $2 million hover at only 20.

Sales volume drops in the South Island cities were modest. Christchurch’s sales volume is down 2 percent to 7770, with 80 percent of that volume selling between $250,000 and $750,000 while Dunedin’s 2586 sales are 7 percent down on last year, 85 percent of those in the lower price bracket.

NOT ENOUGH STOCK

In Auckland’s Mount Albert and Sandringham, Anne Duncan, of Anne Duncan Real Estate, says that she’s really seeing the cycle of not enough listings slowing movers down from listing their own home.

The $900,000 to $1 million market is the one feeling the pressure, as on the next rung up the ladder $1.3 to $1.5 million, there is nothing for hungry buyers. At a recent auction for property expecting $900,000 to $960,000 her agency had 85 groups through and six registered bidders.

“Nothing, nothing, nothing. They’d be the ones going up to late $1 million or $2 million, but there’s nothing there either.

“Even a doer upper, a re-clad job had three offers in a week,” Duncan says. “The investors are back in, but other people don’t want to be homeless so only selling if they need to sell. There’s growth on the extremities [of the city] because there’s new building supply, but there’s more demand in Mt Albert or Sandringham.”

Barfoot and Thompson agent Andrew Cosgrave is seeing more buyers at open homes in his Grey Lyn patch, particularly in the $890,000 to $1.1 million price range.

“If people want to be in their new house by Christmas, they need to be buying now. One pretty place, we had 150 groups through in three weeks. There’s a feeling of momentum.”

And buyers aren’t shunning places that need work, Cosgrave says, particularly what he terms “liveable do up” where houses are dated and tired, but owners can live there happily while they figure out their renovation plans.

“I’d be listing now, as everyone else does the same thing,” he says. “It has taken people a little while to accept that prices have come back slightly, but now vendors know they’ve got the market, properties are selling.”

'IT'S GETTING BETTER'

On the North Shore, where only 84 properties sold over $2.5 million in the past year (nearly half of the volume sold in 2018), Premium agent Alison Parker says there is a real shortage of prestige properties in Takapuna and Milford avenues and sea-side streets. Buyers wanting to trade up to places with enough land and in good school zones are turning up to open homes, and beach side, lake front or cliff top places are being snapped up.

“Vendors might be surprised that they might get a bit more than they thought. It’s getting better, it seems people aren’t afraid to buy, there’s just not enough stock to replace.”

Harcourts agent Jordan Selwyn says people hanging on to their properties expecting an upturn in prices does indicate a confidence in the market - “it’s not like 2008 when listings were astronomically high on the North Shore, where people were panicking and getting their money out”.

He sees a break in the cycle. “People were hanging on to properties as a bit of a knee jerk reaction, but as they come around to view the new climate as the new normal, they’ll come back to listing again," he says.

“The current climate for owners to sell and buy for a fair price in a decent time frame is fair. Previously [in the market peak] people were scared they couldn’t buy, and that wasn’t fair.”