“More indications emerge supporting a property market up-turn, with reports investor interest is increasing,” reports Director of City Realty Group, Daniel Horrobin.
The latest QV House Price Index shows the first quarter of increasing prices since the downturn began towards the end of 2021.
Corelogic chief property economist Kelvin Davidson says it is now easier to get a mortgage, which is helping prices increase.
Commenting on investor interest, Kelvin says: “A net 24% of mortgage advisers this month have reported that they are seeing more investors in the market. This is the strongest result since January 2021 and accords with growing anecdotal evidence that investors are tentatively returning to the market.
“They are encouraged by strong population growth in some locations courtesy of record net immigration, hopes that interest rates have peaked, strong demand for rental property, now rising house prices in many locations, and political opinion polls suggesting a change in government and eventual return of interest expense deductibility.”
Daniel points out that historically, prices in the CBD have been driven to a large extent by supply and demand and that there are issues with supply of newly built CBD apartments. To quote CBRE associate director of research Tamba Carleton: “the current pipeline of new supply for the Auckland CBD is extremely low.” While there are currently 122 apartment projects under construction across the Auckland region, only two are in the CBD.
Add to that, forecasters expect that some time over the next month or so, New Zealand will clock up 100,000 net migrants into the country, a large proportion bound for Auckland. Daniel says: “Our CBD apartment market is looking up.”
TradeMe reports that according to the latest Property Price Index, properties are spending less time on the market, and prices are on the rise after a ten-month decline.
Headwinds persist however. Random interest rate hikes are causing headaches for both borrowers and mortgage brokers, who are increasingly finding themselves with a drastically different offer from pre-approval by the banks to time of purchase.
Daniel says: “Overall however there is a definite sense of optimism in the sales room. Our listings and sales have remained steady for the month, finishing on a high at the last auction for September. This resulted in six sold from eight, with vigorous bidding on all but one.
“Supply remains stalled at around 500, but that will be interesting to watch post-election,” says Daniel.
In the rental space, CBD apartments showed an increase in rents year on year with the average rent sitting at $580pw – an increase of 16% over 12 months. The demand for rentals in Auckland is still strong with good numbers at viewings and steady inquiry. This is largely due to the robust immigration numbers mentioned earlier and a preference for many renters to be close to the city centre.
“All in all, it will be a very interesting roll through to Christmas if the election result goes as many predict,” concludes Daniel.