OneRoof talked to New Zealand's real estate leaders and asked them what buyers and sellers should expect in the coming months. Here's what they had to say:
Peter Thompson, managing director, Barfoot & Thompson
Auckland’s property market has entered a new growth cycle, which has every chance of continuing until we get close to the September general election.
The signs were there in November and December, and it was confirmed when the sales data for January became available in early February.
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Prices paid for property in January were around record levels and sales numbers were the best they’ve been during January for four years.
Peter Thompson, managing director, Barfoot & Thompson
There is activity across all price segments of the market, with the strongest sales numbers being achieved in the $1m-plus category.
New listings at the start of the year were solid, but so were sales, and at the end of January we had the lowest number of properties on our books at that time of year for four years. It means current market conditions represent an excellent time for owners to list their property.
Traditionally, the housing market quietens in the run-up to an election, as buyers and vendors put off decision-making until certainty returns. But unless radical proposals emerge, the election’s impact should be modest.
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Mike Bayley, managing director, Bayleys Corporation
Just like the sensational spell of summer weather we are experiencing, the Auckland residential property market has really heated up this year – building on the simmering amount of activity we began recording in the final quarter of last year.
The last two years of relative flat-lining in Auckland residential property values have allowed buyers’ cash reserves and deposits to catch up with prices.
Existing home owners trading up the property ladder constitute the biggest group of purchasers, followed by first home buyers. The “mum and dad” and foreign-funded investment sector, while still in existence, is smaller than it was during the last bull-run – as many would-be buyers in that niche have been deterred by the various legislative changes contained within the new Residential Tenancies Act.
Vendors are also more upbeat about listing.
Mike Bayley, managing director, Bayleys Corporation
Interestingly, many are now far more realistic with their pricing expectations. This has resulted in a balanced market recording a rise in stock clearance rates.
It is a status we are forecasting to continue through summer and well into the second quarter of the calendar year, before the patently foreseeable double whammy which will see the annual winter sales slowdown simultaneously amalgamate with the run up to the general election in September.
Vendors are probably very cognoscente of this looming potential lull later in the year, too, hence one of the reasons why we have seen a lift in the number of listings in the market now as they make their move while the sun is still shining.
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Carey Smith, chief executive, Ray White
Last year was a year of two halves. At the end of June, the sales numbers were 19 per cent down from the previous year. At the close of 2019 there were 72,904 sales; a slight reduction of four per cent on the previous year. The last quarter certainly made up for the previous period. Ray White achieved the highest number in sales ever for a quarter during the final three months of 2019.
We've seen record median prices reached in many parts of the country and there have been price increases in 15 out of 16 regions across New Zealand. Interest rates remained at record lows making it attractive to borrow money, although this was offset by higher property prices. So, as far as affordability goes, it was similar year-on-year. The overseas buyers’ restrictions appeared to affect sales volumes in 2019, but not prices. The record low Official Cash Rate and bank lending rates have meant eased accessibility for more first home buyers. Investors are returning to the market and auction numbers are high.
Carey Smith, chief executive, Ray White
Rental returns remain appealing given the low interest rate environment. Property still offers a strong yield, even as more costs are imposed on landlords from Residential Tenancies Act amendments and the Healthy Homes standards. With rental demand continuing to outstrip supply, vacancy rates will remain low over the coming year and rental prices will continue to rise.
More home-building activity and consequent growth in supply could curb home price gains, along with election uncertainty. The possibility of a change in government toward the end of 2020 may also lead to some significant changes to the housing policy.
Conversely, with the Official Cash Rate at historically low levels the Reserve Bank has little room, if any, to influence rates further downward, so we can expect fixed mortgage interest rates to settle and remain throughout 2020. Overall, we see the residential property market in 2020 remaining positive.
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Bryan Thomson, managing director, Harcourts
The momentum displayed by the real estate market in the lead up to the Christmas period gave a very clear indication of what we can expect during the first half of 2020.
Demand from determined buyers across New Zealand exceeded the supply of new listings coming to the market, which was reflected in positive price outcomes. The Auckland marketplace joined the rest of the country after a prolonged period of lower than usual volume, a welcome conclusion to 2019 in our largest city.
Bryan Thomson, managing director, Harcourts
Given our positive employment environment, historically low mortgage interest rates and ongoing demand, sellers of property in 2020 are likely to continue to enjoy positive results if they ensure their properties are promoted well, and that their price expectations are in line with the market.
As we move through 2020, and closer to election day, our media will be filled with promises, predictions and policies from the political parties, each designed to secure our individual votes. The impact this may or may not have on the real estate market remains to be seen. We would suggest that if you’re considering selling or buying, act early in the year to take advantage of today’s positive conditions and avoid the confusion that often accompanies an MMP election campaign.
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Josephine Kinsella, managing director, LJ Hooker and Harveys Group
January saw a significant increase in the number of residential properties coming on to the market across New Zealand, suggesting a reasonably steady season ahead. Average asking prices declined slightly in many regions in January compared to December. On the whole, property prices seemed steady across the country towards the end of January, with some resurgence in parts of Auckland, Dunedin, South Canterbury and the seasonal hotspots of summer.
With an election year ahead, 2020 may well see the market keep steady with an occasional burst of energy possibly bucking traditional trends. Often, however, the election month is the one timewhere the market takes a breather.
Josephine Kinsella, managing director, LJ Hooker and Harveys Group
Interest rates are historically low and not looking likely to increase and the supply of homes in key locations remains lower than the demand. There has been a slight influx of investors returning to the market but mostly in provincial regions with good returns.
The market, despite regulatory pressures slowing growth, seems to have the demand to keep pushing through, and first home buyers have certainly jumped on the ladder to commence the year of investment.
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Barry Thom and Grant Lynch, directors, UP Real Estate
This is an exciting time for housing in Auckland. Buyers are back out in force. We can already report a much more positive sentiment – confidence has returned. The basic question is: will it last?
An election year can often cause things to go into wait-and-see mode. Our sense, however, is that there is a general catch-up in motion. Until recent months, sales numbers had been falling since 2015. The foreign buyer ban was definitely a reason for this, as was a general shift in attitude from the banks as to how they might fund purchasers.
Barry Thom, director, UP Real Estate. Photo / supplied
Grant Lynch, director, UP Real Estate. Photo / supplied
Given the strength of immigration over the period and falling interest rates, we feel the lower sales volumes were driven by negative sentiment and general uncertainty – witness capital gains tax. This has changed. Several bank economists predict an increase in house prices over the next year or three. Right now demand is high and supply is short. For home-owners waiting for a good time to go to the market – this is it.
