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Investor Demand Spikes as Auckland Apartment Market Delivers

By Daniel Horrobin

It’s without question confidence has returned to the property market with Ray White New Zealand now completing its third consecutive record-breaking month, which is extremely encouraging. With a strong mix of buyers across the board from first home buyers, to empty-nesters, to investors driving this enquiry, it’s fair to say this activity is being shared across most sectors.

Here at our City Apartments office, we’re extremely encouraged to see a significant lift in confidence among investors returning to the vibrant apartment market. This interest has been driven predominantly by the high yields available throughout the city in a market that remains extremely affordable for the largest city in the country.

While September delivered close to a record number of new listings coming online for our team, the buyer demand saw our sales volume run inline with this, showing a 35 per cent increase on last year. The message to buyers is clear, act now. What are you waiting for?

We’ve seen values remain quite stable as a result of the flow of new stock coming to market, providing opportunity to both buyers and sellers in the market. Despite some uncertainty around the rental market earlier in the year, we’re seeing pressure ease across the board with a 15 per cent approximate drop off in the number of apartments available to rent.

What does all this mean? Investors seeking a high-returning, positive cashflow investment will unquestionably achieve the best value for money and returns in the CBD apartment market, with the facts showing us your income stream is stable as tenants continue to snap these up.

Ray White Now NZ 6 October 2020 – Carey Smith, Ray White New Zealand Chief Executive

As we enter the first week of October the supply and demand for property continues its momentum from the highs of September. The Ray White Group in New Zealand completed a record result with property sales of $1.338 billion. This was the third month in a row that previous records have been broken based on value.

When we look at the numbers; sales increased by 83 per cent in value and this is attributed to both the increase in sales prices and the number of sales. In the area of supply, our listings continue to gather momentum with 2,020 properties offered by Ray White members which was 22 per cent up on 2019.

Our real-time data shows a similar position over the past week with sales continuing to increase, being 48.7 per cent ahead in numbers at a level of 1,737 live listings. There is a disparity in the supply of new listings coming to the market which are currently up 21.5 per cent with live listings showing at 2,056. This means that there is a continual supply of property coming to the market, but the demand continues to increase, and this is placing pressure on prices.

Auctions continue to be a strong barometer for market performance; measuring the level of buyer engagement as well as the selling rate of properties offered to the market. In the last seven days, Ray White offered 117 properties for auction, up 112.7 per cent on last year and had an auction day selling rate of 82.7 per cent. In addition to this, on average the properties offered attracted 4.6 registered and 3.3 active bidders per property, both categories of buyer increasing from 2.4 and 1.5 respectively. The picture that this data paints is the high level of engagement on both sides of the transaction – that is buyers and sellers both motivated to achieve a sale. 

Having acknowledged that this cycle is unlike anything that has been experienced in recent memory, it is much harder to predict where the market may head next. What is occurring at present though is the fundamental supply and demand dynamics at work. Although supply is increasing, it is not increasing at the same level of the demand. It is not generally typical for both of these drivers to increase at the same time and the result of this is the increasing transaction numbers that are currently being seen. 

What does that mean for people considering selling now? All indicators suggest that there will be a continuation of the strong listing levels coming to the market as we progress through spring which will capture the attention of additional buying interest on the back of the depth of pre-approved buyers. This coupled with the increased affordability through record low interest rates, favourable returns compared to other investment opportunities, and general confidence in the housing market, are all underpinning the record sales results currently being achieved.

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