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Market Comment – December 2018

By Daniel Horrobin

Buoyant market: a great time to buy, a great time to sell

Despite a short-lived softening in the number of sales over recent weeks, more sellers are making the decision to go to market and capitalise during this traditionally busy real estate period. This is driving buyer enquiries and lifting sales, providing a positive feeling in the market overall as we head into the final month of the year.

Among those buyers are investors whose appetites are continuing to grow as record-low interest rates and higher net returns favour the Auckland apartment market over most others. While in the auction room, a greater level of negotiation is still happening to bridge the gap between buyers and sellers. However, in such a changing market, auction continues to be the most effective method of sale – it generates more interest and offers while also reducing the number of days properties sit on the market, which delivers better results all-round.

With Christmas and New Year just around the corner, the property market remains buoyant and likely to maintain its momentum throughout the festive season.

So, if you’re thinking about selling around this time, our advice is to start your preparations now. Get your property available and ready for buyers over the holiday break so you can take advantage of all the Christmas activity. And if you’d like any further advice on buying, selling or investing in Auckland’s central city apartment market, talk to us; we’re the experts after all.

Kiwi’s passion for property continues to soar in November –

Real-time statistics from show New Zealander’s passion for property continues to soar, with 1,157,371 unique browsers active on the site during November.

“This is the highest level of visits to the site since March 2017,” says spokesperson Vanessa Taylor. Two recent external property milestones did not appear to drive “more than usual” traffic to, she says.

“In the two days following last week’s Reserve Bank announcement, which gives the banks more flexibility around loan-to-value ratios (LVRs), traffic remained consistent with the rest of the month.”

The second milestone was the Overseas Investment Amendment Bill, which came into effect on 22 October, classifying residential land as “sensitive”. In general, it means that existing homes can only be bought by New Zealanders and residence-class visa holders who have spent the majority of their time in New Zealand. Australian and Singaporean citizens are also eligible.

Following a massive lift in new listings in October (20.1% increase compared to October 2017), it’s no surprise that the Auckland region dominated property search terms on the site in November, says Vanessa.

“We had a really good start to spring and Aucklanders were making the most of it by putting their properties online early to maximise selling opportunities before the festive season,” says Vanessa.

“Effectively the Auckland region was a month ahead of the traditional start to the summer market and as a consequence, this meant we saw fewer new listings in November.

“While the Auckland region registered a 17.2% drop in new listings in November compared to November 2017, the boost of new listings in October has resulted in a positive net effect when the two months are considered collectively.”

The total number of homes on the market in Auckland in November is up 5.0% compared to November 2017, representing 10,431 homes to choose from.

Home lending restrictions to ease from January –

Home lending restrictions are to ease from January next year. The Reserve Bank will lift restrictions on bank lending to both owner occupiers and investors. From January 1, 2019, banks will be allowed to lend 20 percent of their new loans to owner-occupiers with a deposit of less than 20 per cent. That is up from the current level of 15 per cent.

While banks will be able to lend 5 percent of their new loans to investors with a deposit of less than 30 per cent. Currently, that is 35 per cent.

At the start of this year the restrictions were changed to allow banks to lend up to 15 per cent of new loans to owner-occupiers to those with a deposit of less than 20 per cent. The changes have seen first home purchases grow percentage wise while investor purchases have dropped.

LVR: What to expect from January 1, 2019:

– Up to 20 percent (increased from 15 percent) of new mortgage loans to owner occupiers can have deposits of less than 20 percent.

– Up to 5 percent of new mortgage loans to property investors can have deposits of less than 30 percent (lowered from 35 percent).

Get in quick: ‘Historic’ low mortgage rate deals almost all gone –

Home buyers yet to secure a “historic” low mortgage rate are close to missing out as three of the four major banks bump prices back up and experts warn the deals aren’t likely to be back anytime soon.

ANZ – the nation’s largest bank – had earlier fired the first shot in last month’s mortgage war by offering the lowest rate by a major bank since just after World War II with a fixed one-year term of 3.95 per cent. Westpac and ASB soon after matched the deal with one-year rates of 3.95 per cent, while BNZ offered a two-year deal at 3.99 per cent.

But from today ANZ, Westpac and BNZ will all raise their rates back above 4 per cent, leaving ASB as the only major bank still offering a 3.95 per cent rate.

Loan Market mortgage adviser Bruce Patten says the low rates – which were always intended as short-term Spring promotions – had sparked a rush among home buyers that made last month one of the busiest for the brokerage in the last 18 months.

But while he would like to see the banks extend or bring back the deals early next year, he wasn’t “holding my breath we’ll see them coming back” anytime soon.

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