Property predictions: What to expect in 2019

New Zealand's real estate leaders review the housing market in 2018 and offer their predictions on what buyers and sellers should expect in 2019.

Peter Thompson, Managing director of Barfoot and Thompson:

Between now and the year end, I anticipate the residential housing market will be active in comparison to the first three quarters of the year, with prices being stable or even edging up a little.

The arrival of spring brought new life to the market, and the trading results in October were strong.

Sales numbers for the month were the highest they have been in an October for three years, and average and median prices were the highest they have been this year. At the same time the number of properties for sale is the highest it has been for six years, according to Barfoot and Thompson data.

News on the economic front in relation to housing is also positive. Mortgage interest rates are likely to remain at current levels for the next two years (based on Reserve Bank comments that the OCR rate is likely to remain as it is through to 2020) and the unemployment rate has dipped below 3 per cent.

Combined, these factors have created an ideal trading environment.

One of the more encouraging developments over the past nine months in Auckland has been the growing number of apartments and town houses reaching the market that are selling for under $500,000. The pipeline of these properties coming to market is solid.

It is opening up the property market to a far greater number of first-time buyers and people on limited incomes.

Mike Bayley, Managing director of Bayley Corporation:

Auckland’s residential property market is firmly progressing through a period of stable trading, in a trend evident for the best part of 2018 and likely to remain for the foreseeable future.

Region-wide, price increases – or decreases – in all value bands have been minimal either way as the buyer-market takes a more relaxed and reasoned approach to purchasing property.

We have tracked that listing volumes are up – and subsequently sales volumes have increased. That statistic has largely been off the back of generic growth in the number of dwellings built in the city over the past six years and now coming onto the market for sale.

Include apartments and retirement village units (residents moving into those villages have usually sold their suburban home to engage the process) in that pool alongside new build homes, and it’s easy to see that the more dwellings there are in Auckland, the more sales there will be as a consequence.

Additionally, last year’s comparative sales activity was down in the third and fourth quarters because of the General Election malaise.

There will be the usual pre-festive season surge in sales as purchasers and vendors look to cement a degree of certainty for themselves going into 2019. After that, Auckland residential property sales will ease off until February, when most people return from their holidays.

Expect to see this year’s pattern of level-headedness in Auckland’s residential real estate scene replicated in 2019 as borrowing rates remain at historic low levels. Concurrently, the fundamentals of the New Zealand economy – including employment levels and business confidence – are still sound, enabling owner/occupiers and investors to buy with confidence.

That activity-driving confidence will be underpinned by ongoing low mortgage interest rates – such as the 3.95 per cent one-year rates announced by the ANZ and Westpac.

Carey Smith, CEO of Ray White:

The residential property market, when measured in months, has shown quite strong seasonal trends, with listing numbers rising considerably during the past month. This has culminated in a higher number of sales than in August and September. Prices have also increased slightly, returning a further degree of normality to the market.

Last month, sales rose considerably, particularly in the Auckland and Wellington markets. Buyer confidence has also buoyed regional New Zealand, resulting in strong sales activity.

Legislative change in the Overseas Investment Act has created additional barriers for overseas buyers. While this is not expected to have an influence on prices, it may delay the opportunity for overseas investors to be involved in the market.

The Reserve Bank has indicated that it doesn’t plan to raise the OCR low anytime soon. LVR requirements are still part of the purchasing process and the banks are requiring disclosure around lending. However, this is part of the way buyers need to assess individual properties, particularly when borrowing close to the LVR levels.

In the area of property management; while legislative changes have been applied for better living conditions, yield is expected to continue to increase as vacancy sits at a historic low rate and the availability of property is also at low levels.

Josephine Kinsella, Managing director of LJ Hooker:

The residential property market has returned to a normal state, with Auckland’s median sale price stabilising, and buyers enjoying a greater selection of properties to choose from on the back of recent increases in listing numbers.

In the run-up to spring, there had been a shortage of listings, and industry residential sale volumes hit an eight-month low. However, October sales volumes increased by 2 per cent and have continued strongly into November.

The Overseas Investment Amendment Act that came into effect in October - plus scheduled changes to anti-money laundering legislation concerning real estate – has led to, in some parts of the country, a slight rush on properties.

The banks have also helped stimulate activity, offering competitive rates as an incentive for purchasers who have been waiting for the right time to buy.

For vendors bringing their properties to market over the coming months, success will depend on a structured campaign and the ability of an agent to pre-qualify buyers and communicate effectively.

In metro areas, the “no price” method of sale remains a favoured process, bringing a result within a specific period. While there is a strict process around “no price” marketing, it still shows potential for strong results from a smaller, but qualified selection of buyers.

For property investors, change has come in the form of recently introduced regulations. I expect many private landlords will review the workload involved in managing tenants (especially following changes to health and safety regulations) and that there will be an increase in demand for property management services.

Chris Kennedy, CEO of Harcourts:

Summer is almost upon us and the countdown is well and truly on to Christmas.

This is an exciting time of the year for so many reasons. It’s a time to enjoy more time outdoors, which gives us a sense of well-being; it’s a time when we might be preparing to welcome family who are overseas back to our shores for the festive season. And it’s also a time when many of us are thinking about making home improvements … or even selling up and making a move.

The market seems to have settled, with the average national house price rising 3.23 percent in the 12 months to October to $605,389. The lift in prices was evident across all regions except Auckland, which fell back by 2.17 percent.

Total listings across the country held steady, with only a 1.95 percent decrease when measured against the same period in 2017. As we enter the summer selling season, I expect auctions to produce strong results.

Barry Thom and Grant Lynch, Directors of Unlimited Potential:

In this pre-Christmas season, the market in the areas we serve is awash with property for sale. It would seem the lack of enthusiasm vendors showed post-election to go to the market is being made up for this year. But as the number of homes available for sale continues to rise, the number of buyers has not. Consequently, the time it takes to sell has increased.

The run-up to Christmas will be interesting, in light of the foreign buyer ban that came into effect on October 22. The lower end of the market continues to be buoyant, but at the upper end there has been a distinct wait-and-see attitude, although things appear to be thawing slightly as buyers make pre-Christmas decisions.

One of the issues we face as an industry is the proliferation of opinion of a home’s value as indicated on various property websites. These are generally called the “estimated selling range” and are formulated based on various algorithms that use historical sales data.

In many cases these ranges are incorrect, as are the latest council valuations. These two pieces of information together are indicating a likely selling range in excess of today’s value. This can be frustrating for vendors wanting to sell. Consequently, buyers looking to purchase should inspect homes without prejudice.

In terms of what is the market doing, there has been a tinge of hesitation/lack of confidence, which is hard to understand given the overall state of the nation, immigration, low interest rates and low unemployment. However, nothing stays the same for long in this business.

- As told to Donna McIntyre