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An air of Confidence for Auckland’s Apartment Market

By Daniel Horrobin

An air of confidence for Auckland’s apartment market –

February showed a very positive increase in the number of new listings for our City Apartments team, along with steady growth in buyer momentum as first home buyers and downsizers are recognising the benefits of inner-city apartment living. Investors are also wanting a piece of the action as they continue to re-enter the market after the introduction of the LVR rules in 2013, which previously cooled the investment market.

This activity has created a sense of urgency among buyers as more of them rush to secure a property in fear of increased demand driving values up.

Our busy auction rooms reflect this perfectly and bring good competition for sellers, who we are now seeing become more willing to negotiate on the floor to secure a successful sale, rather than wait until after the auction; a trend that happened all too often in 2019. 

On a broader note, Ray White NZ posted some fantastic results for February with a significant increase in overall productivity, an impressive 489 auctions held that engaged over 800 attendees, activity that delivered an encouraging clearance rate of 72%. These numbers represent very positive growth for the company across all areas.

And before we go, we’d like to say how proud we are of our SuperCity rentals team. Not only have they been named #1 business for letting across the Ray White group over the last six months, they’re also #3 business in Ray White NZ for new managements coming on board. Great work, team.

So if you want to buy, sell, invest or rent in the city’s apartment market, give our experts a call today.

Industry view: There’s momentum in the market –

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:

Carey Smith, chief executive, Ray White

Last year was a year of two halves. At the end of June, the sales numbers were 19 percent 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.

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.

Price report: Is your suburb hot or not? –

The New Zealand housing market has started 2020 on the front foot, with the nationwide median property value up 3 percent year on year to $620,000. Interest rates are still cheap, and there is no sign of this changing in the foreseeable future – a boost to first home buyers, who continue to be the country’s most active buyer group. Mortgage registration data reveals that first home buyers continue to be the most active buyer group. This is further supported by recent Reserve Bank of New Zealand (RBNZ) figures that show an increase in low deposit lending. With mortgage rates remaining at historic low levels and no strong indications of any impending strengthening in the official cash rate, this trend is expected to continue.

Auckland – are the boom times back? – After a three-year-long slump, Auckland’s property market has rebounded, with a new median value of $890,000 up 2.7%, but the big question on everyone’s lips is how high will prices go?

Westpac economists have revised their forecast from a 7 per cent jump this year to 10 per cent, and Real Estate Institute of New Zealand (REINZ) and OneRoof figures for January showed Auckland prices have hit levels not seen since 2016. Agents report queues at open homes and auctioneers say there has been an uptick in the number of bidders battling it out during the first few months of the year. The fear that houses brought to market in Auckland will sell below CV is a distant memory.

OneRoof-Velocity figures for the quarter showed growth in all parts of the city bar one region –Rodney – but even so, values were flat. The reversal of fortunes for the country’s biggest housing market was evident in the strong finish to 2019. While a decline in sales volumes during the Christmas / summer break was evident, activity levels remained heightened.

Enhanced confidence and expectations that the low interest rates are here to stay have been the main growth drivers, but adding fuel to the market are several factors specific to Auckland: increased buyer demand within certain locations and price brackets and a shortage of listings within the $800,000 to $1.1m bracket within city fringe locations.

So who’s buying? Investors are starting to return to the city’s southern fringe but overall activity continues to slide, with their share of new mortgage registrations down 4.5 per cent year on year to 14.25 per cent. That has benefited first home buyers, whose share of new mortgage registrations has increased 6.9 per cent year on year to 27.8 per cent. Evidence of homeowners capitalising on their equity growth remains evident in the fact that refinance registrations continue to grow, up 3.8 per cent on the same period last year to 30 percent of total registrations.

Overall, given current activity levels in Auckland, coupled with supply shortages within key submarkets, value growth is anticipated to continue throughout the first half of 2020.


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