Real estate leaders on what buyers and sellers should expect in the coming months.
BARFOOT AND THOMPSON: Have confidence in the market
Peter Thompson: From now until the end of the year, I anticipate the Auckland residential housing market to be active.
There are three key reasons for this confidence.
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The first is the market has weathered the traditional autumn and winter downturn well. For the four months April through July the number of sales each month has been higher than the corresponding month in 2017, while average and median prices during these months showed limited movement.
The second is the number of properties for sale since April has been easing and at the start of August were at their lowest in 10 months.
Thirdly, in its latest economic forecast, the Reserve Bank’s overview pointed to mortgage lending rates remaining at current levels through to at least 2020.
While there has been some speculation that Auckland market prices may follow the example of Sydney, and fall, the Reserve Bank Governor made it clear that while such a trend was “possible” it was not what the bank was “anticipating”. Nor did he dismiss the possibility of prices rising.
With housing choice tight, demand exceeding supply, stable mortgage rates and trading banks with mortgage money to lend, there is every reason to be positive about the prospects for housing for the remaining months of 2018.
At current prices, vendors’ and buyers’ expectations are meeting.
Unless there is a major change caused by external factors, it’s where prices are likely to stay for the remainder of the year.
Peter Thompson is Managing Director of Barfoot & Thompson
BAYLEYS: Deals are being done - just at a slower rate
Mike Bayley: The two key indicators of residential property market activity — pricing levels and listing volumes — have drifted south in a state of mild sedation over the past few winter months.
However, there is still activity in the market with serious and enthused vendors at the core of sales transactions.
That’s good news for purchasers as they know the properties they are looking at are being marketed by vendors with genuine motivation.
Deals are being done. Just at a slower rate compared to summer.
It is important to note that while listing volumes may be down, we know anecdotally that sales figures — as a percentage of total listings — remain fairly similar throughout the year. No matter what season we are in, buyers are seeking homes year round.
From a listings volume perspective, I believe the status-quo is likely to remain ‘as-is’ well into October — bearing in mind the spring selling period traditionally awakens a month earlier.
More vendors are coming to the realisation that Auckland’s residential real estate market is in a new phase of the property cycle — a flat period of capital value growth which could set a trend through to 2020.
Factors such as tighter loan-to-value lending policies from the banks, a flattening and easing of net migration numbers, tighter foreign investment regulations, extending the Bright-line ownership timeline, and new Government regulations for investment property owners, have all been singular strands meshing together to make the rope that has reined in price rises.
Mike Bayley is Managing director of the Bayleys Corporation
RAY WHITE: Expect a spring surge
Carey Smith: The residential property market continues to show consistency in a period considered seasonal. Traditionally this is a period where national sales numbers are lower at approximately 6000-6500 a month. But when compared to the previous 12 months, numbers are slightly higher. Prices have increased by just over 3 per cent.
The market has a degree of normality, with no changes expected regarding lending, property supply or buyer confidence.
The new Government has not made the dramatic legislative changes around property that were expected. Legislation for overseas investment has been tabled but is is yet to be clarified. Other areas that were indicated have not come through, including capital gains and other property taxes.
The Reserve Bank has held interest rates at low levels. While the LVR requirements remain, there is more requirement around disclosure regarding lending.
This will not change the availability regarding property finance but there will be a tightening around information to be provided by the potential purchaser.
The Auckland market is expected to have a surge of listings from September. Wellington remains tighter with lower stock levels and days on market being below the national average. Christchurch has a good supply of property.
It’s the regions that have shown the greatest pricing increases for the past 12 months. As purchasers look for value, regional centres could experience ongoing shorter supply of property and price increases.
Carey Smith is Chief Executive of Ray White NZ
UNLIMITED POTENTIAL: Don't be surprised if prices start to firm
Barry Thom and Grant Lynch: Spring is in the air and with it a sense of resurgence in the residential market. Since the election the market has undoubtedly slowed, for a range of reasons, not the least of which was a sense of uncertainty on the back of some fundamental changes.
However, it would seem things are thawing out as we come out of a winter hibernation — activity is increasing into spring. We are already observing renewed competition for some properties.
The potential grey cloud on volume and values is the impact of the Government’s Overseas Investment Bill. This controversial piece of legislation is designed to limit foreign buyers from purchasing Kiwi homes. The impact of this remains to be seen.
In addition, our observation is that buyers are more cautious. This follows the banks seemingly taking a more conservative stance towards lending, often requiring more due diligence on particular property.
As a heads up, we would advise those attempting renovation to ensure they have a permit and code of compliance certification on completion.
There is no doubt there is a sensitivity and potential downside to any property that has a fault, either of the title or construction.
Buyers will be encouraged by the unchanged OCR and, with it, indication that interest rates may hold to 2020.
Similarly, sellers always feel better about listing their home as the garden bursts into spring flower.
In short, we would expect an increase in sales activity and would also not be surprised if prices firmed on the back of this.
Barry Thom and Grant Lynch are Directors of Unlimited Potential
HARCOURTS: Notable lift in auctions
Chris Kennedy: Moving through the coldest months, we’ve seen good activity in the Auckland housing market as winter continues.
From Harcourts statistics, we’ve recorded the average Auckland house price for July 2018 as
$877,088.
New listings in the city were up by an impressive 37.29 per cent compared to last year, from 472 to 648, indicating an uplift is in the air for the coming months.
This increase will also reflect the hard work our network of agents in Auckland have done to ensure new opportunities are presented to potential buyers in the market.
Auctions, too, have seen a notable increase of 21.81 per cent since July 2017.
This is a positive sign that auctions remain as a valid and trusted way for properties to be sold.
Harcourts has some of New Zealand’s best auctioneers so selling with us via auction is a great way to give yourself the edge when it comes to listing your property.
To make the most of the market conditions, I’d advise sellers to make sure they are working closely with their sales consultant to create the best possible marketing campaign to connect them with the right buyers, for the best result.
Those who have listed now will no doubt see that no matter what the weather is doing, people still need to move, whether it be for new jobs, for family reasons or just those with itchy feet.
So, no matter what the season, there are always opportunities.
Chris Kennedy is CEO of Harcourts
LJ HOOKER: Homeowners likely to benefit from lower rates
Keith Niederer: The real estate market has returned to normal levels with a shortage of listings not just in Auckland but nationwide.
In Auckland prices have remained steady with no real drop as costs of land and buildings increase and timeframes add up.
Capital gain will be nominal if any in Auckland, with the regions possibly seeing more capital gain but not to the extent of the 2016/2017 market.
The real estate market has been underpinned by the Reserve Bank decision to keep the official cash rate at a record low. In the bank’s monetary policy August 9 statement, the forecast for any OCR. increase was pushed out a year, implying a late 2020 lift.
Two-year fixed mortgage rates remain below 5 per cent across major banks and this looks likely to continue. Homeowners set to renew their mortgage agreements in the coming months could benefit from even lower rates. A lot of families, whether they own their own home or rent, are hunkering down, living frugally and trying to save some money as confidence levels decline.
This could mean more listings coming to the market in all suburbs as home owners trade down or move to more affordable regions. Whatever happens with the global economy will wash up on our shores.
The auction method of sale is still a best option. The marketing elevates the property above the rest, with open home attendances often seeing more potential buyers through the door, offering the vendor more chances of a sale. A great result for all parties with the best possible price in the shortest possible time with the least amount of hassle.
Keith Niederer is General manager of LJ Hooker & Harveys Group
