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Summer Surge for Auckland’s Apartment Market

By Daniel Horrobin

Summer Surge for Auckland’s Apartment Market

As we roll into the final month of 2019, it seems the only way is up for Auckland’s apartment market.

An increase in buyer activity and a noticeable rise in the overall number of sales within our business is promising an uplift of energy. As a result, we’re seeing more apartment owners listing their properties ahead of the holidays as they look to capitalise on the current market and sell up before Christmas. And it’s proving to be a positively smart move.

Sellers who have made the decision to go to market are being rewarded. Fierce competition, particularly in our auction room, is creating upwards pressure on property values. And if our auction success rate is anything to go by (currently sitting at 73.5%), this uplift might just continue into 2020. But it’s not just the sellers that are smiling.

Among all the buyer activity, investors are becoming very active again, which is great to see. Their motivation? Low interest rates and positive returns.

To round up, Auckland’s apartment market is heating up as we sail into summer. So if you want to ride the wave and make the most of the current buzz, give us a call. We’re the experts in buying and selling city apartments in central Auckland.  – New Zealand’s real estate chiefs give their take on the market and outline what buyers and sellers should expect in the coming months.

Carey Smith, Ray White CEO – The market is starting to show the value of the changes in the official cash interest rates, which has meant for many a potential change or upcoming change in their re-negotiated mortgage rates. If there is a further reduction in the OCR, this will signal increased affordability and allow more first home buyers to consider entering the market.

While banks continue to review their retail rates, 2020 will see lending remain tight as potential interest rates continue to drop. This will make home-purchasing more affordable and it could also invariably push up prices if listings remain at a continued lower level.

The changes brought about by the Healthy Homes Act will help investors maintain yield and provide for higher occupancy rates. In the area of property management, regulation will settle down in 2020.

Rents will continue to increase slightly, and vacancy rates will remain low over the coming year.

So, we see the overall market in 2020 being positive. There will be an increasing number of first home buyers and investors entering the market on the back of more affordable home loans. While property listings will remain competitive, we see this adding to potential price increases across New Zealand.

Auckland asking price continues to fluctuate – Auckland’s average asking price dropped back 2.2% to $915,794, after a lift last month to $936,850.  “Following sharp drops in April and May which saw the average asking price dip below $900,000, the region has seen prices hover around the low 900s for most of this year,” says Vanessa. 

Being New Zealand’s largest market, the Auckland region has the tendency to sway the national results, which is perhaps why we saw the national average asking price drop back 1.0% to $680,592 despite all the regional highs. 

Kiwis appeared to be holding off on listing their homes during November – New listings followed a similar trend to the total homes available in November, with new listings down across the country. The only exceptions were Nelson & Bays and Otago, who saw increases compared to last year of 6.6% and 10.9% respectively.

Nationally new listings were down 7.6% suggesting that Kiwis were generally holding off on putting their homes on the market during November. This was a trend reflected in our major centres with Auckland, Wellington and Canterbury dropping 7.0%, 5.9% and 2.7% respectively compared to November 2018.

“It is fair to say that those who are looking to buy over the summer break may need to do a bit of digging and be patient with the small number of homes on the market at the moment. It will be very interesting to see what happens over December and into early 2020,” says Vanessa.

REINZ.CO.NZ – 27th November 2019

“Today’s announcement from the Reserve Bank of New Zealand to keep LVRs at their current level was not surprising. All the data we’ve analysed over the past 12 months has shown that house prices have risen significantly across most parts of the country. In many towns and cities record median prices are being recorded, so to ease restrictions could create an uplift in the market that would be unsustainable in the long term.

“Additionally, all the data points to this uplift in prices continuing, with predictions of around 4% house price rises per annum for the next few years. A stable market is good for everyone, and we think keeping LVRs in their current position is a prudent approach by the Reserve Bank,” continues Norwell.

“While lending to first time buyers is up on the same time last year (lending increased 12.2% when comparing the first 9 months of 2019 to the first 9 months of 2018), there is still an argument that saving the 20% deposit is difficult for many people looking to get into the property market and therefore we would like to see first time buyers considered in the future. For example, Auckland has a median house price of $868,000 which requires a 20% deposit of $173,600. This is out of reach for many households and so some easing of this requirement would be welcomed,” she concludes.

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