Up $150K on the Shore but January house prices off to mixed start

January’s property buyers are already out in force, after price fatigue and a tough year stopped the market dead in December.

But agents around the city report mixed prices being paid after December’s slowdown - up on the North Shore but down in South Auckland.

Harcourts agent David Ding, who specialises in mostly entry-level properties around North Shore’s Glenfield, said that he had pre-auction offers after four days on a property he listed January 8, a tidy three-bedroom 1980s house on Totaravale Drive, Totara Vale.

“I got four people fighting for it [at the brought-forward auction]. The offers started at $1.1 million – that’s last year’s price – but bidding went up to $1.355m, almost double the $785,000 CV.

“Most of the buyers are first-home buyers, so they don’t have to sell anything. Last year this would be a $1.1m to $1.15m property so this year is up $150,000 already. Two years ago, this house would go for $800,000 to $900,000, max.”

Ding’s January result comes as December’s sales figures released by the Real Estate Institute of New Zealand showed Auckland’s median residential property price was down a marginal 0.8% in December from November. The annual city-wide price was still up a whopping 25.9% in the 12 months to December.

Four bidders battled at auction for a three-bedroom home in Totara Vale on Auckland's North Shore that sold for $1.355m. Photo / Supplied

REINZ chief executive Jen Baird anticipated the December drop presages a gradual slowdown in the pace of price growth in 2022 as a result of tougher scrutiny by banks of borrower finances under the new the Credit Contract and Consumer Finance Act (CCCFA) that came into effect at the start of December 2021.

“[It] seems to have had an immediate effect. Feedback from several regions notes a fall-off in buyer numbers – particularly first-time buyers – as a result.”

REINZ noted more houses for sale – up nearly 30% on last December to 16,773 across the country – gave buyers greater choice, but with just 10 or fewer weeks of inventory available in most of the country, pressure on prices will remain until supply rebalances with demand, Baird said.

Ding told OneRoof he expected vendors who were tossing up whether to sell now would be helped by seeing this week’s action, but added that picky buyers needed to see really well-presented properties to pay the “decent dollar.”

In South Auckland, Barfoot & Thompson Papatoetoe agent Karan Sawhney said attendance at last weekend’s open homes was on par with the weekends in 2020 and 2021, but that he had already seen the effect of CCCFA-stymied buyers on prices.

“They’ve corrected by about $100,000. Properties that were selling from $1.15m to $1.2m are now looking at $1.05m,” he said, citing a spec buyer of uncompleted townhouses in Manurewa who paid $980,000 for four terrace houses about three months ago.

First-home buyers looking for double grammar zone addresses are keen on a two-bedroom unit in Prospect Terrace, Mount Eden. Photo / Supplied

“He expected to sell the completed houses for $1.05m, normally you get more when the build is finished. But he got $980,000 and $970,000, same as what he paid, with two still to sell.”

However, Sawhney is pleased at the market turn for 2022.

“Prices were inflated, but having stable prices now is good for everyone. Everyone was becoming property developers or traders, but now people will realise that there are other careers out there.”

Sawhney said the market returning to the calmer days of 2016 to 2017 was a much-needed break.

“We need a year of no increases, or even decrease. The market will get used to that.”

Also in South Auckland, Ray White Manukau business owner Tom Rawson said agents were surprised at the pick up this week in enquiries, with an average of five groups attending open homes, more than seen in the slowdown in December.

“People were burnt out before Christmas. Now there’s new energy, but also a bit of a wait-and-see mentality,” he said.

A terrace house on Great South Road, Epsom, had five people through the first open home, drawn to the double grammar zoning. Photo / Supplied

“I think we’re back to a normal market, not a crazy market. And everyone knows how to operate in that sort of market, compared to when there were so many unknowns.

“In January last year, average properties around here were $600,000 – at the peak they went to $1.2m, now they’re back at $1.1m. That’s still ridiculous.”

Rawson said that agents were having to work more closely with buyers about what they could afford with the new lending restrictions. Agents are reporting that for many clients, banks dropped pre-approvals from $1m to $800,000 to avoid deals falling over.

“We need to be more fluid about accurate buyers, accurate sellers so we don’t waste people’s time.”

Barfoot & Thompson agent George Fong, who hosted his first open home in Mount Eden, Epsom and Stonefields last weekend, said that the phones went very quiet at the end of last year.

“But this week buyer enquiries have picked up. We got five groups through a double grammar zone terrace in Epsom with buyers looking to spend around $1.7m to $1.8m.

“At the end of last year there was not much to choose from, some people couldn’t be [bothered] looking but now they can.”

But, Fong added, buyers are genuine, looking to upgrade their homes for all the usual reasons, not out looking for bargains.

“We’re seeing the last of the vendors who already bought last year and are getting their places ready to sell. Developers and investors haven’t come back, these are family homes.”

He said he got the impression people were extending their holiday, but with more listings lined up to hit the market in two or three weeks, interest would pick up.

And while the top-end of town is still quiet, Ray White Remuera agent Ari Starr said 21 people turning up to an open home last weekend for a smartly-presented four-bedroom brick and tile home on Waiatarua Road, Remuera, next to Meadowbank Primary School, was a sign that first-home buyers were not resting from the market in January.

“We had over 4000 views on our video, normally we’d reach about 1000. Most are people planning to buy their first home or upgrading, and now thinking these properties are within their price range,” Starr said.

“The narrative of ‘wait and see, there’s more stock coming’ isn’t right, there’s always a run on good homes and if people try to pre-guess the market, they miss out.”

Starr added that agents are working harder to make sure buyers have pre-approval for finance early on in the process to avoid missing out at auction.