Real estate leaders on what buyers and sellers should expect in the coming months.
Bryan Thomson, Managing Director of Harcourts
The market is experiencing a period of adjustment with multiple changes impacting on buyer confidence.
The anti-money laundering legislation, the now-defunct capital gains tax, and the ban on overseas buyers have all contributed to stabilising the market. This has also led to a reduction in the number of new listings.
Start your property search
Provincial markets remain positive, although there are some areas beginning to mimic the Auckland market.
Complying with the healthy homes legislation put additional financial pressure on landlords.
The tax working group have advised they still intend to restructure the tax system. This has contributed to uncertainty, with buyers and sellers being less confident with property decisions.
It remains difficult to quantify what percentage of the reduction in sales in Auckland is due to foreign buyers being unable to purchase property now, mainly due to the lack of data available on historic activity. Over the coming months, proactive and well-researched sellers will succeed by presenting their properties superbly. If they sell and buy in the same market, they will protect their buying power.
Buyers need to be prepared with finance in place, an up-to-date understanding of market activity, and the courage to act to secure the property that best suits their requirements. The apartment market in Auckland remains an opportunity, not only from a lifestyle point of view but also from a long-term investment perspective. With an absence of the excessive apartment building experienced by the larger Australian cities, we have every reason to look to Auckland’s apartment sector with confidence.
-----
Mike Bayley, Managing Director of Bayleys Corporation
While sales volumes as a whole have been down in Auckland residential sectors for the first quarter, in the higher-middle to upper-end value quartiles there has been an increase in sales.
Conversely, for the entry level and first home buyer quartiles, much of the fall in listing and sales volumes can be attributed to investors pulling back as they waited for the outcome of the Government’s tax working group.
Development of both apartment and stand-alone homes in and around Auckland continue to attract buyers in the entry- to mid-level price range.
For investment-orientated buyers, with little chance of capital growth over the coming years, rental yield has again become the benchmark matrix on setting purchase prices.
With an easing off in residential property values over the past 14 months, Auckland dwellings, valued at near or above the median price bracket of around $850,000, are still a stretch in terms of mortgage payments.
It’s going to take a couple of years of minimal price inflation for the home affordability equation to rebalance itself and for buyer momentum to rise to the levels evidenced between 2013 and 2017. If you’re thinking of selling, now is as good a time as any.
-----
Peter Thompson, Managing Director of Barfoot & Thompson
Now that a capital gains tax is off the table, the Auckland property market can refocus on the factors that will determine where the market goes, rather than speculate about potential threats.
The market is well into a new cycle, one of modest sales numbers and prices moving in a tight band, close to record highs.
During such cycles, vendors tend to wait for the market to become more active.
The important message for both vendors and buyers now is if they want to move forward they need to meet the market.
Interest rates are low and are expected to stay that way. Banks do have money to lend to those they deem to be able to meet repayments.
The biggest factor holding back market activity at present is lack of confidence.
Speculation about the direction the market will take is so rife that it has undermined certainty. That will return, but it will take time.
Given where the Auckland market is now, a strong case can be made for the Reserve Bank to once again tweak its deposit requirements. Too many first home buyers are being excluded from the market through the artificially high entry level requirements.
-----
Carey Smith, Chief Executive of Ray White
The residential property market during the first four months of 2019 has shown continued strong seasonal trends.
The number of listings is similar to 2018, although the slowing market has seen property remain on the market longer. At the end of April, there were 27,858, or 6.1 per cent, more properties available on the market than at the same time in 2018.
The Reserve Bank’s decision to reduce interest rates was significant — it is the lowest rate since the official cash rate (OCR) was introduced in March 1999. This further signals that interest rates will remain low for a longer period, and there is a distinct chance they will be reduced later in the year. Rents continue to increase across most city markets. Vacancy rates are sitting at low levels and property available for rent is historically low also.
Overall, both buyers and sellers can take confidence that the market will remain positive for both sides.
-----
Barry Thom and Grant Lynch, Directors of Unlimited Potential
There’s no doubt that talk around the now-cancelled capital gains tax hasn’t been helpful in terms of general sentiment in the residential market, especially among buyers challenged by vendors with often unrealistic aspirations based on historic sale prices in their neighbourhood. CVs way beyond market value have not helped either.
Together these factors have served to produce a standoff between buyer and seller that has seen some vendors withdraw and others take a lot longer than normal to process the reality of current market value.
The consequence of this conundrum has been an 18 per cent drop in sales numbers in the Auckland area over the past year.
The Reserve Bank lowering of the OCR has led to some banks offering lower mortgage rates.
On the back of that, we sense something of a new breeze blowing. Even as the number of available homes goes through the traditional winter shrinkage, buyers are re-entering the market. As an overview, it would appear that city fringes are vulnerable, as buyers looking to be centrally located, compare values in a softer market.
Another observation is that those who purchased within the last two to three years, may or may not get their money back today.
In summary, we are optimistic that things are improving.
-----
Josephine Kinsella, Managing Director of LJ Hooker
New listings continue to provide selection, adding to supply, while asking prices are staying static. The first quarter provided residential buyers with low interest rates and plenty of options across most of New Zealand.
Days to sell in most areas held around the 44- to 46-day mark (excluding Otago, Gisborne, Wairarapa). Regions taking longer to sell are Northland and Rodney, with the average exceeding 56 days.
Investors are hanging in there, despite increased regulations, and average rents are increasing due to a shortage of supply. Suitable rental properties have often been snapped up by first-home buyers.
Demand is high around the country for realistically priced lifestyle properties (under $800,000) and these sell quickly.
The commercial market responded positively to the Government abandoning the capital gains tax, with leases and sales swiftly moving ahead.
Investors and landlords are not as active in buying and this is causing shortages as rentals are sold. Tenants can expect pressure on rents as landlords meet the new standards for healthy homes.
Our outlook for the next quarter is that sellers who are prepared to be realistic will sell, while buyers who present flexible and realistic offers will be able to buy. Prices will remain static in most regions.
Although lending rates are highly competitive, banks will remain cautious. Anti-money laundering legislation is playing a part in increasing timeframes around loan applications, with finance clauses that need longer periods to process. Simply put, the key to selling or buying in the market lies in being savvy and realistic.
