Ray White Auckland Central April Market Report

Good News Is Good News.

A Radio NZ headline on March 28 said: “Lower interest rates getting closer – Reserve Bank governor Adrian Orr.”

Reserve Bank governor Adrian Orr said the tide was turning on inflation around the world and there was a clear feeling among central bank leaders he had spoken to recently that interest rates have peaked and cuts are getting closer.

Director of City Realty Group, Daniel Horrobin says: “At the same time, what we are hearing is that the major banks are easing up on lending criteria.”

Daniel adds “With our corporate office reporting a substantial lift in activity across the board compared to March last year, our own results reflect that”.

“March was a strong listing month for us with the number of properties taken to auction in that month showing a 75% increase on March 2023”.

“We were delighted with the publicity a $1 reserve auction in early March for a central city leasehold apartment attracted across a range of mediums” says Daniel. “The bidding opened with a bid of $1, then $2, then $5,000, then eight live bidders and 52 bids later, the property was declared sold for $62,000, much to the relief of our very happy client and needless to say, ourselves”.

“The highlight of the month overall was on March 21 when eight of the 11 properties auctioned sold on the floor” adds Daniel.

Seller engagement is gaining serious momentum. The number of Trade Me properties for sale in the central city continues to climb and is now well above 600 after diving below 500 as

recently as November last year. At a property symposium held mid-month, a number of property/economic commentators agreed:

• It is steady as we go – no boom anticipated

• Investors are back

• Interest rates are steady

• Immigration is placing pressure on rents.

• It’s not all good news however.

OneRoof, NZ Herald’s property portal, said on April 1: “Last week, the Reserve Bank published the latest figures on the breakdown of the existing stock of mortgages. This showed that 59% of existing loans (by value) are due to reprice within the next year”.

The same OneRoof commentary reports: “But at least the inflation trend remains in the right, downwards direction, especially when it comes to firms’ input costs, pricing intentions, and overall inflation expectations”.

Though there could still be more pain to come for some, Daniel says: “The good news far outweighs any other. With seller confidence on the rise and bank lending easing, there is a quiet optimism in the market generally”.

“The highlight of the month overall was on March 21 when eight of the 11 properties auctioned sold on the floor” adds Daniel.

Tony Alexander: The scene is slowly being set for some quick interest rate cuts

But the cuts may not come soon enough.

ANALYSIS: Last week I wrote about the deteriorating labour market and how people’s rising worries about employment are affecting housing. Because the employment cycle lags the economic cycle, even when we are initially out of recession and activity is picking up, the labour market will continue to worsen – probably well into 2025.

Does this mean the housing market will be weak well into 2025? Probably not. But until the Reserve Bank recognises it has over-restricted the economy and it cuts interest rates quickly, the current situation of a flat market is likely to persist.

Flat in the context of residential real estate doesn’t mean no change in prices but rather when looking past the month to month fluctuations there is little evidence of much

price gain. For instance, if we look at the average over three-month periods, we see that in the September quarter of last year Auckland house prices on average rose by 2.6%.

They then rose 2.5% in the December quarter but have now declined by 0.8% in the first three months of this year. In Auckland the number of properties listed for sale at the end of March was 23% higher than in July last year so buyers have extra stock to peruse at their leisure.

In fact things are so leisurely now for buyers only 6% of agents in Auckland responding in my monthly survey with NZHL now say that buyers are displaying FOMO. Back in September that was 45%. The pandemic frenzy peak was 90% in October 2020.

The net proportion of real estate agents

The Reserve Bank will need to consider whether or not it has over-restrained the economy with higher for longer interest rates. Photo / Doug Sherring

in Auckland saying that more investors are actively looking for property has turned negative by 5% from a positive 16% in September. The net proportion saying they are seeing more first home buyers has dipped from 56% to only 12%.

A key characteristic of this recent fresh period of market weakness is a backing away of young buyers to a greater degree than the backing off of investors. The only small investor change looks like it is due to not that many deciding to advance their buying anyway over the second half of last year. They are affected by large increases in some key costs such as for rates and insurance, debt servicing charges are cyclically high, and many may simply be ageing and looking to fund their retirement through selling their investment asset.

Independent economist Tony Alexander: “But now job worries are acting to rein in household spending and that is something the Reserve Bank will have to increasingly take into account.” Photo / Fiona Goodall

The young buyers have probably pulled back firmly from their earlier very strong interest because of the new development

running through the economy and discussed last week – employment worries. This is actually something quite important.

The negative impact on the economy and therefore eventually inflation has to date not been assisted much by the labour market. The unemployment rate has only gone from an unsustainably low 3.2% to 4% and wages growth has only minimally slowed down.

But now job worries are acting to rein in household spending and that is something the Reserve Bank will have to increasingly take into account as we advance through this year. It will be discussing whether the overall degree of restraint on the economy is turning out to be more than it think it needs, especially with a fresh deterioration underway in the outlook for world growth due to heightened tensions and actions in the Middle East.

The scene is slowly being set for some quick interest rate declines – but definitely not in the next few months.

- Tony Alexander is an independent economics commentator. Additional commentary from him can be found at www.tonyalexander.nz

Market Statistics.

Sales

March 2024

March 2024

March 2023

March 2024

51 $18,760,000

March 2023

$345,000

There was a -64% decrease in the total number of sales year on year.

March 2023

144 $68,119,620

There was a -72% decrease in the total sales value year on year.

Source: REINZ

There was a -13% decrease in the total median sale price year on year.

March 2024

$300,000 40.5

March 2023

49

There was a -17% decrease in the total median days on market year on year.

Recent Sales.

AUCKLAND CENTRAL

Sales data is from REINZ and covers the entire Central Auckland property market.

Our Auckland Central auctions are held weekly on Thursdays at 12:30 pm, hosted at our dedicated auction room located at Level 3, 246 Queen Street. Whether you’re a buyer seeking your dream property or a seller looking to capitalize on the buoyant market, our auction events offer a prime opportunity to engage with the Auckland Central real estate market.

Don’t miss out on the excitement and opportunity – mark your calendars and join us for our upcoming auction events at Ray White Auckland Central.

Auctioneer & Auction Manager

027 424 1782 cameron.brain@raywhite.com Cameron Brain.

The auction activity over the past month has been a mix of outcomes, showcasing both promising and dynamic market trends.

Among the notable auctions, one stands out as the highlight of the month: the auction held at 257 Sandringham Road, Sandringham. Marketed by Tracey Potter from our Ray White Sandringham Office, this auction drew significant attention and resulted in an exceptional outcome.

Property Details: The property in focus was an original 1940’s home situated on a corner site spanning 533m2. Its location in Sandringham, coupled with its unique characteristics, rendered it a compelling investment opportunity.

Auction Highlights: The auction garnered substantial interest throughout its campaign, attracting attention from prospective buyers keen on seizing the potential offered by this property. As the auction day arrived, the anticipation was palpable, with 15 registered bidders poised to participate.

Bidding Dynamics: The auction commenced with an opening bid of $700,000, setting the stage for a spirited bidding war. Over the course of 78 bids, the intensity of the competition escalated, reflecting the keen interest and determination of the bidders. Ultimately, the property sold for an impressive $1,575,000, marking a significant achievement and underscoring the desirability of the asset.

Outcome: The successful conclusion of

the auction at 257 Sandringham Road, Sandringham, represents a resounding success for all parties involved. Not only does it underscore the vibrancy of the property market in the area, but it also exemplifies the efficacy of strategic marketing and diligent campaign management.

Apartment Market Activity: In addition to the standout auction, the apartment market has also witnessed notable activity. Investment properties priced below $500,000 have garnered considerable buyer interest, indicating a buoyant market segment ripe with opportunities.

Conclusion: In conclusion, the recent auction activity reflects a dynamic and robust property market, characterised by moments of excitement and significant outcomes. The success of auctions such as the one at 257 Sandringham Road, Sandringham, serves as a testament to the resilience and potential of the real estate sector. As we navigate the evolving landscape, it is imperative to remain agile and proactive in capitalizing on emerging opportunities.

For more information and to view our current auction listings, please visit our website or contact our team directly.

Ed McKnight: Interest rate deductibility: How much money will landlords be saving each year?

Tax rule change will affect some investors differently.

ANALYSIS: The National-led Government has brought back interest rate deductibility for property investors, which means some landlords are in line to pay less tax.

But the trouble with interest deductibility is that the tax calculations are complex and they will affect property inventors differently. Some will save tens of thousands of dollars a year, others will save nothing at all.

This is because the rules will vary according to property type, date of purchase and who is renting the property.

To illustrate this, imagine three houses next to each other. They’re all identical. All three are worth $800,000 and have a $600,000 mortgage. Each is rented out for $700 a week and the owners have the same interest

rates.

The only difference is that the houses were bought at different times and are rented out to different people. Yet, one of these three investors will be $152 a week better off under the new rules, while another will be no better off at all.

House No.1

Peter and Sally bought own the first of the three houses. They purchased it in April 2021, directly after Labour announced it was scrapping interest rate deductibility.

Because of this, they have never been able to claim back tax on their interest rate payments. They’ve borne the brunt of the rules straight away.

The return of interest rate deductibility means some investors will be facing a much smaller tax bill.

Photo / Fiona Goodall

They’ll get 80% deductibility over the next 12 months, which could save them $7896 in tax in the first year alone - that’s $152 a week.

Because Peter and Sally paid a lot of tax under the soon-to-be scrapped regime rules, they stand to benefit the most.

House No.2

Next door is the investment property bought by Kendra and Shae in February 2021, just before Labour announced the tax changes.

That means the couple have been operating under a slightly different set of tax rules.

Over the past 12 months, they have been able to deduct 50% of their interest costs when calculating their tax. As of April 1, this has gone to 80%, which will save them $38 a week.

They won’t save as much on tax because they didn’t pay as much tax to begin with.

House No.3

The last of the three houses is owned by

Deborah and Honi.

When they bought the house they decided to rent it out through the local Salvation Army, which is a social housing provider. That gave their property a special tax status. Deborah and Honi have been able to deduct all their interest costs, which meant they dodged the impact of the interest deductibility changes in March 2021.

Now the tax rules have switched back, nothing changes. They will continue to deduct all their interest costs, which means there is no difference in the amount of tax they pay.

The outcomes of the above scenarios might sound unfair, but the investors who will be better off are the ones who already faced the full effect of the rules to begin with.

Rather than creating an uneven playing field, these changes make the rules fairer. It means that no matter when you bought the property and no matter who you choose to rent it out to, the same tax rules apply to all property investors.

Opes Partners resident economist Ed McKnight: “The trouble with interest deductibility is that the tax calculations are complex and they will affect property inventors differently.” Photo / Fiona Goodall

Market Comment. Property Management.

Superb. SuperCity Property Management

Minnie Spend, Mighty Gain.

We welcomed a large bunch of new landlords and their hard working investment properties to our portfolio this month. One in particular stood out…

This poor old unit wasn’t just tired it was exhausted. It was clear that with a little bit of TLC we could improve the performance of the investment for our landlord. The previous tenants had been paying less than $300 per week.

Here at Supercity we have renovators, contractors, painters / decorators all on speed dial. So we were straight on the job.

Within two weeks the apartment was renovated, refurbished and re rented for $520 per week!

Allow out contractors to work for you too!

Is it time for a change?

Did we get a hint of a change in sentiment from the Reserve Bank in the announcement on April 10th?

The Reserve Bank once again left the Official Cash Rate (OCR) on hold for the sixth consecutive time. The last change made was back in May 2023, however there is some glimmer of hope that we might start to see an easing in the monetary policy with them reinforcing they do expect inflation to return to their 1-3% target range this year. (it currently sits at 4.0% - so we are very close now!)

We are also now starting to see more bank economists paring back their expectation of changes that the first cuts will be seen between August and November rather than into early/ mid 2025 like they have been saying.

Another really important factor for New Zealand is when the US starts cutting rates, once that happens, it opens the door for New Zealand to do that same. If we move before the US does, it will have a detrimental impact on the NZ currency.

This means there is a lot of pressure mounting on the Governor of the Reserve Bank in this latest announcement. Let’s hope they don’t become so driven on driving the economy into the ground before they make a move. We don’t think they will, especially given their poor judgement a few years ago that has led to the current situation we see ourselves in.

We still hold a strong view that fixing for 6-12 months is a good approach to take.

Based on the current interest rates, when is the best time to buy?

Whether it’s your first, your second or an investment property, the best time to buy is typically when interest rates are at their highest. Right now the number of houses on the market are at the highest

level in more than a decade, so it’s a buyers market. As interest rates start to fall later in the year, you will see a pick up in market activity and inevitably an increase in house prices, especially with the amount of people moving into the country and a reduction in the number of building consents being issued.

As always, feel free to give us a call if you wish to discuss anything.

Marketing your home.

A COMPREHENSIVE MARKETING STRATEGY TO REACH ACTIVE & PASSIVE BUYERS.

The marketing strategy is designed to reach the breadth of the active and passive buyer pool in the most effective manner, based on their Media consumption.

Our marketing strategy comprises of 3 key components; property portals, social and multi-channel digital strategy and print media.

Property Portals.

PRIMARILY ACTIVE & SOME PASSIVE BUYERS

There are 3 key portals, TradeMe Property, Realestate.co.nz and Oneroof.co.nz.

Property Portals generally attract active byers in the market, OneRoof has a unique position as it reaches both active and passive property buyers due to the diversity of information it has on the platform including property

Digital Marketing.

ACTIVE & PASSIVE BUYERS

The Ray White City Realty Group has introduced a state-of-the-art digital solution that is powered by artificial intelligence to reach the breadth of the active and passive buyer pool across social media and multiple digital channels, including news and other high traffic websites. The programme is fully automated in the back end, it creates an audience

Print Media.

listings, estimated property values, market news and commentary. It is important to run campaigns across all 3 to effectively cover the breadth of the active buyer pool and a part of the massive buyer market. None of the property portals have complete market coverage and each of these portals have a set of unique audiences.

segment of active buyers specific to the property as well as reaching the passive buyer pool. The campaign is structured to deliver quality leads for the property, and it auto optimises spend across social media and multiple digital channels, skewing the spend towards channels that are performing the best.

PRIMARILY PASSIVE & SOME ACTIVE BUYERS

Print continues to play an important role to cover the breadth of the market reaching quality and highly engaged audiences. It takes criteriabased search out of the equation with respect to the active market and is the most effective medium to reach the all important passive buyer

market. This is clearly evidenced by the fact that the New Zealand herald has seen a massive 48% increase in its print readership over the last 18 months and average time spent reading the paper is over 50 minutes. The value of print is also well supported by agent feedback.

Why choose us?

We’re on the Up-and-up.

Based in the heart of Auckland City, Ray White Auckland Central & Wynyard Quarter are an awardwinning agency in Auckland City that specialise in apartment sales for investment, luxury waterfront and lifestyle.

Our 183+ dedicated professionals who understand this unique market, are all top performers who have contributed to our phenomenal results. As the Auckland central market continues to experience unprecedented growth, our Queen Street & Wynyard Quarter offices are well positioned to maintain its leadership in the market.

0800 002 420

www.rwaucklandcentral.co.nz

City Realty has a strategic partnership with LoanMarket, to provide clients with the best mortgage advice and rates with brokers throughout our offices that provide Home Loans, First Home Buyers Loans, Construction Loans, Refinance, Selfemployed Loans and Vehicle Finance – whatever the loan, LoanMarket can help.

Our office achieved the No.4 Ray White office in the world for 2018 and the No. 2 Ray White office in New Zealand for 2018 and we do the highest volume of sales across all agencies in New Zealand.

City Realty Limited (Licensed REAA 2008)

Daniel Horrobin Cameron Brain Pauline Bridgman

Mike Richards

Belinda Henson

Ady Huang

Carl Russell

Craig Warburton

Aileen Wu

Casey Chen

Danika Ansley

Grant Elliott

Amit Rana

Cheryl Whiting

Habeeb Urrahman

Keisha Gutierrez Krister Samuel

Ben Parkes

Chris Cairns

Bosen Han

Chris Guilford

Dom Worthington Dusan Valenta

Jeong Lee

Leo Zhang

Gillian Gibson

SALES TEAM - AUCKLAND CENTRAL OFFICE

Kristine Liu

Judi Yurak

Holly Cassidy

OUR SALES SPECIALISTS

Ross Tierney

Andrew Bond Ainsley Lewis

Luke Crockford

Max Beliak

Gabriela Galateanu

Our strongest team yet. Selling right across Auckland Central & City fringe

OUR LOANMARKET MORTGAGE ADVISOR

WE CAN NEGOTIATE A LOWER RATE. WORK WITH A QUALIFIED AND COMPETENT MORTGAGE ADVISER

Jamie Maclennan

LoanMarket Mortgage Adviser

Marco Sahar

Michelle Yurak Nick Armstrong

Ryan Bridgman Sam Huang

Steve King Steve Kirk

Louise Stephens

Leo Zhu

Lisa Zhang

SALES TEAM - WYNYARD QUARTER OFFICE

Tony Warren Tristan Young

Sophie Catherine

Create. Recognise. Grow. The group with the family factor.

www.rwaucklandcentral.co.nz

www.rwwynyardquarter.co.nz