New Zealand’s luxury property market is starting to gain momentum in regions outside Auckland and Queenstown, but there is anxiety among buyers and sellers around the proposed new rules on foreign buyers, says one of the country’s leading real estate agents.
Graham Wall, who owns Graham Wall Real Estate and holds the record for the country’s highest residential sales price, said that although most luxury properties sales were in Auckland, he was seeing increased interest in Hawke’s Bay and the Bay of Islands.
“The Bay of Islands has become increasingly popular with American buyers, and some of the sale prices there can often take people by surprise. It seems to be a very American thing to have a beach and a boat and go fishing.
“The luxury property market in Hawke's Bay is also starting to gain momentum. I've noticed a society occurring in Hawke's Bay - everyone is very fancy and the streets are full of Range Rovers all of a sudden. Hawke's Bay has a real future.
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“The attraction there is you can buy luxury for less than the average price of a house in Auckland. ”
Figures released by REINZ showed an increase of million-dollar plus house sales outside of Auckland, up from 1066 in the first half of 2017 to 1363 in the first half of this year.
Northland saw a 23.3 per cent increase in million-dollar-plus sales and Hawke's Bay saw a 23.3 per cent rise.
However, the best performers, according to REINZ, were: Wellington, which saw an additional 115 houses sold over the million-dollar mark in the first half of the year; Otago (from 183 to 232); Waikato (from 138 to 177); and the Bay of Plenty (from 176 to 213).
CoreLogic senior researcher Kelvin Davidson said that New Zealand’s luxury residential property market tended to be centred in Auckland: figures showed that all 31 sales of $10 million-plus freehold residential properties in the past five years in New Zealand were in the region.
Mr Davidson said that in Auckland the median sale price of the top 10 per cent of the market had dipped in the past year, from $3.2 million to $3.1 million. REINZ figures showed that the number of $5m-plus sales in New Zealand had dropped from 55 in the first half of last year to 46 in the same period this year.
Mr Davidson said: “Since the introduction of the new LVR rules, and a more cautious approach to lending by the banks as well as reduced affordability, we've seen the top end of the property market take the hardest hit. To be fair, buyers in that bracket probably rely less on mortgage finance than those in the lower-price brackets, but it’s still interesting to note. By contrast, the lower and mid-tier properties are more likely to be seeing the strongest price growth.”
Mr Wall said that although his business was performing well, he had noticed ”a little bit of anxiety around the proposed new rules around foreign buyers, as no one knows exactly what they will be and what impact they will have".
The Government is working on a bill that will restrict non-residents and non-citizens’ ability to buy residential property in New Zealand.
Mr Wall said that the number of foreign buyers looking for a luxury property in New Zealand wasn’t as high as is often perceived – “it’s quite a small number”.
“Probably the biggest buyers in the luxury market are ex-pats. Every week we seem to get a Kiwi returning from London or New York or Dubai who wants to know what they can buy near the sea,” he said.
New Zealand’s clean green story has been a big drawcard for overseas buyers but other factors have driven interest, he added.
“American buyers I’ve talked to say they love New Zealand, because it is slightly reminiscent of 1950s California and has a clean green story. On top of that, New Zealand can offer them sophistication – we have world-class restaurants and international-quality entertainment. American buyers also like the fact that New Zealand is well regulated and safe, and has no soft borders. You can feel secure that things aren’t going to radically change overnight.”
Mr Wall said that it was hard to generalise what buyers paying $20m-plus were looking for in a house, but a water view was usually key. “Harbourside houses tend to be valuable everywhere. In Auckland, maybe there are a couple of a hundred houses that have water directly in front of them and a road behind them - that's a characteristic that a lot of great houses have. A long line of sight - that's also an in-demand feature,” Mr Wall said.
"Architecture is almost secondary. Position tends to more important than the actual house. In Auckland, with construction prices rising, well-built houses in premium positions are very easy to sell."
Of the houses that he had seen, Mr Wall’s personal favourite was somewhat unusual. "We've sold the most expensive homes in Auckland every year for the last five or six years - they are all magnificent houses - but quite often the houses that appeal to me personally ... it's not really a dollar thing.
"One of the nicest homes I've ever been in is a little cottage called the Black Barn, at Black Barn Vineyards, in Havelock North. It’s built in the style of an English barn and is really simple - just a couple of bedrooms – but it has great views. And it’s a house that anyone can rent.
“Seriously, just a million bucks would build it. I think compact luxury is a beautiful thing.”
