Ray White Residential Market Report - February 2024

Residential Market Report.

FEBRUARY 2024

Part of the group with a family factor.

CREATE RECOGNISE GROW

CITY REALTY GROUP

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Contents.

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04.

06.

Market Comment This upturn has Legs.

Article – Tony Alexander: Why NZ has suddenly gone dark on interest rate cuts

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10.

Sandringham Sales Statistics January 2024

Mount Roskill Sales Statistics January 2024

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14.

Auction Statistics & Update with Cameron Brain

Article – Kelvin Davidson: Nine years to save for a 20% house deposit - do you think houses are cheaper?

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Property Management Market Comment

LoanMarket: All eyes on February 28th

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Marketing your property

Ray White Sandringham & Mount Roskill team

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Market Comment.

Ray White City Realty Group.

Daniel Horrobin.

City Realty Group Director

021 595 976 daniel.horrobin@raywhite.com 4

This upturn has Legs.

A NZ Herald quote on February 8 said: “House no one wanted a year ago is snapped up for $1.2m in just seven days”.

Director of City Realty Group, Daniel Horrobin, says: “This quote is symptomatic of a wider confidence from both sellers and buyers generally.

“Of the 15 auctions we have conducted in our Auckland Central office this year 12 have sold on the floor, a success rate of 80% under the hammer.

”Rates should already have dropped, given the sharp fall in wholesale rates before Christmas,” said David, the CEO of one of the country’s biggest mortgage broking firms.

“We have more than 40 auctions (and counting) booked for the second half of February, a positive endorsement from sellers who sense the time for waiting is well and truly over.”

Closer to home, a statement by the CEO of Ray White NZ, Daniel Coulson on February 1 2024 provides further encouragement. “The number of completed sales across the Ray White group in January was 18.9% higher than 12 months ago.”

Government policy changes, such as promises to shorten the brightline test and to reinstate mortgage interest deductibility for investors, have no doubt contributed to a new-found confidence.

Also helping is commentary such as this, published on Stuff’s website on January 12: Squirrel chief executive David Cunningham said: “Home loan borrowers should see rates come down as much as a full percentage point over the next couple of months.

Rental demand continues to soar on the back of immigration.

Statistics NZ recently reported for the year ended November 2023: “There was an annual net migration gain of 127,400 (plus or minus 2500). That compared to an annual net gain of barely 11,000 in the November 2022 year.”

Daniel says: “We are delighted to begin 2024 on such a strong note and we look forward to the rest of the year with enthusiasm.”

“We have more than 40 auctions (and counting) booked for the second half of February, a positive endorsement from sellers who sense the time for waiting is well and truly over.”

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Tony Alexander: Why NZ has suddenly gone dark on interest rate cuts Rate hike fears likely to slow the housing market revival.

ANALYSIS: For a while there things were looking good on the mortgage interest rates front. Optimism about falling inflation and easing monetary policy in the United States had caused some big falls in medium to long-term fixed rate borrowing costs around the world including here in New Zealand.

For instance, the cost to a New Zealand bank of borrowing in the wholesale markets at a fixed rate for two years fell from 5.6% at the end of October to 4.7% a month ago. As a result bank lending margins increased substantially, and we started to see some small cuts to lending rates of about 0.15%.

This was fairly miserly probably because our central bank would have been talking behind closed doors to the bankers telling them it would not be helpful to undermine still tight monetary policy by passing on this good news impact from the US market. Ample justification for this unseen pressuring by the Reserve Bank unfortunately hit us all last week and the outlook for interest rates is now not so good.

A central way by which tight monetary policy lowers inflation is via a worsening of the labour market. As people worry about their income, they cut back their spending and businesses lose their ability

The financial markets are pricing in another increase in the official cash rate, from 5.5% to 5.75%.

Photo / Fiona Goodall

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to easily pass on cost increases. But last week we learnt that rather than rising to 4.2% as the Reserve Bank had expected the unemployment rate only rose to 4% in the December quarter. Moreover, rather than growing just 0.2% in the quarter job numbers grew 0.4%.

In addition, central bankers in the United States have been warning investors not to be so optimistic about monetary policy easing there. The impact here has been a jump in bank borrowing costs, with the two-year wholesale bank borrowing costs is now around 5.2%.

Is this rise and similar increases for other terms enough to cause a round of increases in bank fixed mortgage rates?

Thankfully no. Because banks never got the chance to pass on borrowing cost reductions from November to January, they have fat in the system able to absorb the recent rise in rates.

This point is probably worth remembering because the financial markets are now pricing in one more increase in the official

cash rate, either on February 28, April 10, or May 22. If the Reserve Bank does raise the rate from 5.5% to 5.75% – and it probably won’t have to – then media commentary will be fairly shattering, and many people are likely to feel quite fearful of the damage which may come.

I’m optimistic that we will receive just enough information showing some easing in inflationary forces to avoid a final rate rise for this cycle. It pays to note for instance that the Household Labour Force Survey from which the unemployment and jobs growth numbers referred to above are derived has a history of rogue results.

The results in fact are at odds with other employment indicators which show greater weakness.

But the main thing to take away from the data is that for the first half of this year interest rates pressure on the NZ economy will remain firm and this will act to constrain not just our pace of economic growth through crunching retailers, but the initial speed of upturn in the housing market.

Tony Alexander: “For the first half of this year interest rates pressure on the NZ economy will remain firm.”

Photo / Fiona Goodall

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JANUARY 2024

Sandringham Market Statistics.

Total Sales

Median Sales Price

January 2024

January 2024

January 2023

January 2023

There was a 100% increase in the total number of sales year on year.

There was a -1% decrease in the total median sale price year on year.

Total Sales Value

Median Days On Market

January 2024

January 2024

January 2023

January 2023

There was a 84% increase in the total sales value year on year.

There was a 82% increase in the total median DOM year on year.

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$7,735,000 $4,205,000 Source: REINZ 8

$1,287,500 $1,300,000

84 46

JANUARY 2024

Sandringham Recent Sales.

Sales data is from REINZ and covers the Sandringham property market.

ADDRESS

BEDROOMS

SALE PRICE

SALE DATE

3 HALESOWEN AVENUE, SANDRINGHAM

4

$2,075,000

31-JAN-24

8 HARWOOD STREET, SANDRINGHAM

3

$1,390,000

25-JAN-24

12 B LOCARNO AVENUE, SANDRINGHAM

3

$1,185,000

24-JAN-24

3/26 TRANMERE ROAD, SANDRINGHAM

2

$930,000

24-JAN-24

12 D LOCARNO AVENUE, SANDRINGHAM

4

$1,525,000

19-JAN-24

1/16 LANCING ROAD, SANDRINGHAM

1

$630,000

15-JAN-24

Sandringham Listings.

February 2024

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Listing data is from RealEstate.co.nz and covers the Sandringham property market.

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JANUARY 2024

Mount Roskill Market Statistics.

Total Sales

Median Sales Price

January 2024

January 2024

January 2023

January 2023

There was a -18% decrease in the total number of sales year on year.

There was a .4% increase in the total median sale price year on year.

Total Sales Value

Median Days On Market

January 2024

January 2024

January 2023

January 2023

There was a -25% decrease in the total sales value year on year.

There was a -7% decrease in the total median DOM year on year.

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$9,065,000 $12,104,000 Source: REINZ 10

$1,030,000 $1,025,000

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JANUARY 2024

Mount Roskill Recent Sales.

ADDRESS

BEDROOMS

2/84 HAYCOCK AVENUE, MOUNT ROSKILL

Sales data is from REINZ and covers the Mount Roskill property market.

SALE PRICE

SALE DATE

$745,000

26-JAN-24

17 ROGAN STREET, MOUNT ROSKILL

2

$780,000

22-JAN-24

95 STAMFORD PARK ROAD, MOUNT ROSKILL

0

$1,665,000

22-JAN-24

41 FRED WOODWARD PLACE, MOUNT ROSKILL 2

$570,000

19-JAN-24

49 WEBSTER AVENUE, MOUNT ROSKILL

$1,150,000

18-JAN-24

33 CORMACK STREET, MOUNT ROSKILL

3

$1,095,000

16-JAN-24

1446 DOMINION ROAD, MOUNT ROSKILL

3

$1,030,000

16-JAN-24

20 A HAZEL AVENUE, MOUNT ROSKILL

3

$1,060,000

12-JAN-24

32 A ALBRECHT AVENUE, MOUNT ROSKILL

4

$970,000

11-JAN-24

Mount Roskill Listings.

February 2024

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Listing data is from RealEstate.co.nz and covers the Sandringham property market.

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Building Success.

0 1 J A N UA RY 2 0 2 3 - 3 1 D EC E M B E R 2 0 2 3 Stats from all City Realty Group Offices

Total Number of Properties Listed

1211

Total Number of Auction Properties

381

Auction Success Rate:

% of Auction Properties Listed

31%

Non-Auction Success Rate:

65.94%

19.6%

Total Number of Sales for 2023

Total number of Auctions Sold in 2023

47% of all sales in 2023 were as a result of an Auction

Total Sales Value

Total Auction Sales Value

$282M

$89.8M

*Rounded to nearest $100,000

*Rounded to nearest $100,000

31.8% of the Total Sales Value was as a result of an Auction Sale

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Cameron Brain.

Auctioneer & Auction Manager

027 424 1782 cameron.brain@raywhite.com 12

City Realty Limited Licensed (REAA 2008)

Ray White Auckland Central Auctions in 2024:

Despite Long Weekends, Auction Activity Remains Robust.

As we bid farewell to January and February, the City Realty Group proudly announces a bustling start to the year, marked by a dynamic and active auction season. The numbers speak for themselves, with over 100 auction listings and 50 already successfully held auctions, achieving an impressive clearance rate of 60%.

The average number of bidders per auction stands at 3, resulting in a lively bidding atmosphere with an average of 19.24 bids per property. This level of engagement underscores the continued enthusiasm and demand within the real estate market, as buyers actively vie for their dream properties.

One notable trend is the remarkable popularity of auction properties, drawing four times the number of open home attendees compared to other methods of sale. This heightened interest reflects the transparency and competitive nature of auctions, creating an environment that resonates with both buyers and sellers.

The City Realty Group is pleased to report a consistent increase in open home attendees across the group, week by week, since the beginning of the year. This positive trend

signifies a growing and sustained interest in the properties we have on offer.

Looking ahead, we anticipate a vibrant and busy March, encompassing a diverse array of price points. The City Realty Group remains committed to delivering exceptional results for our clients and providing an unparalleled auction experience.

For those seeking more information about our auctions, please do not hesitate to reach out to Cameron Brain, our dedicated City Realty Group Auctioneer & Auction Manager. His expertise and guidance will ensure you are well-informed and prepared for the exciting opportunities our auctions present.

Here’s to a successful March filled with dynamic auctions and remarkable real estate opportunities!

If you would like to discuss anything about the auction process or why should you auction, I would welcome the opportunity to discuss this with you.

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Kelvin Davidson: Nine years to save for a 20% house deposit - do you think houses are cheaper?

The five things you need to know about the housing market this week.

1. The recovery remains patchy This property market upturn could prove to be underwhelming compared to previous cycles, and is likely to be variable from month to month and across regions too.

Most notably, measured across estate agents and private deals, sales volumes in January were only 2% higher than the same month last year, with key markets such as Auckland, Hamilton, and Dunedin actually seeing a drop in sales. In fact, the national total in January of around 3200 sales was basically (apart from January 2023) the lowest for that month of the year since 1983. It

wouldn’t be a surprise to see a bounce-back in February, but still, the ongoing pressures from high mortgage rates are pretty clear to see.

2. Houses are cheaper, but not cheap Another factor behind the variability of this recovery phase so far is simply that housing affordability remains stretched. Yes, if you look at measures such as the number of years it takes to save a deposit, property is less expensive than it was at the worst point in the first quarter of 2022, when it took 11.5 years, compared to 9.3 years now.

Affordability in the housing market remains stretched. Photo / Fiona Goodall

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But even so, I doubt many people are rushing around saying: “Look how cheap houses are!” Indeed, an alternative measure – mortgage payments as percentage of gross average household income – remains at 49%, still close to the toughest figure on record, of 52% in late 2022. Clearly, we still have a significant affordability challenge in our housing market, which may be helped to some degree over the medium term by caps on debt to income ratios. Ultimately, however, it’s about building enough houses (of the right type/location) to meet demand.

3. Rents are still rising quickly too Meanwhile, housing costs remain problematic for tenants too, with the latest Stats NZ figures showing that rents on new leases rose by 6.8% in the year to January – more than double the long-run average rate of 3.2%. This reflects recent wage growth, as well as the standard combination of high demand (stemming from net migration) and tightening stocks of available rental properties. At a regional level, there’s clear strength in rental growth in Auckland and Christchurch, but all of the other main centres are seeing rents rise fairly quickly too.

4. Debt to income ratios back in the spotlight

The latest figures showed that lending on high debt to income ratios remains minimal at present – with only 6-7% of first home buyer loans going out at DTI >6, and a very similar figure for investors at DTI >7. These figures are way below the proposed 20% caps, with high mortgage rates currently doing the job of restraining the size of loans in relation to incomes. Indeed, the DTIs are all about the next cycle, and will only start to bind when mortgage rates drop again.

Over the longer term, they won’t stop cut off lending to investors, but it will likely be a slower process to grow a portfolio.

5. Recession averted?

Finally for this week’s commentary, it’s quieter in terms of data releases over the next few days, but I’ll still be watching for the latest NZ Activity Index on Thursday, covering January’s performance. The NZAC hints that we might have avoided recession in the final quarter of last year, so it’ll be interesting to see how 2024 has started off. Remember there are trade-offs here; a stronger economy should support employment and the housing market, but it’d also tend to keep inflation a bit higher for longer, sustaining the pressure on mortgage rates.

CoreLogic chief economist Kelvin Davidson: “Clearly, we still have a significant affordability challenge in our housing market.” Photo / Peter Meecham

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Market Comment.

Property Management.

Superb.

SuperCity Property Management

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Release the equity!

A long standing client of Supercity who is now based overseas contacted us about reviewing and possibly increasing his portfolio.

A quick desktop valuation revealed considerable equity within his existing portfolio of residential investment properties. With the assistance of our friends at Loanmarket to arrange the mortgage broking and our apartment sales team at Ray White Auckland Central we have utilised this equity to help with the aquisition of a high yielding property without the need to put any additional cash into the deal.

He now has another positively geared income stream.

And he is one step closer to a financially secure retirement!”

HERES A QUICK LOOK AT THE NUMBERS Current Portfolio

Current Market Value

House divided > into 2 flats

$2,500,000

Current lending in this property

> $650,000

Increased the borrowing on this property to $850,000 to assist with acquisition of an additional unit nearby.

If you would like a review of your portfolio please feel free to reach out. You may also be able to add another income stream without the need for putting any cash into the purchase.

Jacque O’Connor Letting Manager and Business Development Manager

021 821 449 jacque.oconnor@raywhite.com 17

CO NT A

CT

ME

:

Jamie Maclennan

027 742 5227 jamie.maclennan@loanmarket.co.nz

All eyes on February 28th.

With an OCR Announcement coming up at the end of the month, we are seeing some banks & economists either picking a 0.25% increase in the OCR, while other view is that they will keep it the same - 28th of Feb is the day we will know for sure.

The confusion in these differing opinions stems from a number of factors, but a large factor has come in the last week or so where we have seen a sizable jump in the wholesale swap rates where it went from 5.33% to 5.71% in 7 days.

This volatility could likely play a significant factor in the Reserve Bank’s next announcement and has come off the back of lower than expected unemployment figures and stickier inflation rates both overseas and here in New Zealand.

We are currently seeing the most popular rates with clients being the 6 month to 1 year fixed rate (sometimes a blend of the two) as we now believe we are at or near the peak of the high-interest rate cycle.

Although we are saying we think we are at or near the peak, the 18 to 24 month rate are also reasonable options for those seeking a little more certainty in the form of time as well as cost.

Look out for our next update after we have had the announcement on the 28th!

To discuss the competitive investment loan options available speak to Jamie today.

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.

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Property Portals.

P R I M A R I LY A C T I V E & S O M E P A S S I V E B U Y E R S

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

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.

Digital Marketing.

AC T I V E & PA S S I V E B U Y E R S

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

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.

Print Media.

P R I M A R I LY P A S S I V E & S O M E A C T I V E B U Y E R S

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.

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Why choose us?

We’re on the Up-and-up.

City Realty Group is the largest Ray White franchise in New Zealand with offices throughout Auckland.

It is the group with the ‘family factor’ - we’re family owned and we treat people like family. We’re all about open doors and open minds.

We encourage a unifying atmosphere where opportunities are created, individuals are recognized and everyone grows - from our team to vendors, investors and tenants.

Ray White Sandringham

Our experienced and established team service the market Auckland wide -from Residential, Luxury Apartments, waterfront properties and rentals. With a dedicated property management team and marine brokerage teams.

City Realty Group has a strategic partnership with Loan Market to provide clients with the best mortgage advice and rates through brokers.

Ray White Mount Roskill

+64 (9) 281 4707

+64 (9) 308 5551

www.rwsandringham.co.nz

www.rwmtroskill.co.nz

Leaders in the Auckland Residential market.

City Realty Limited (Licensed REAA 2008)

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Meet the team.

Daniel Horrobin

May Ma

Director CRG Group

Director Mount Roskill

Pauline Bridgman

Mike Richards

AML Officer

Sales Management

Cameron Brain Auction Manager

Belinda Henson Sales Manager

OUR SALES SPECIALISTS

SALES TEAM - MOUNT ROSKILL OFFICE

May Ma

Aldea Abueva

Anna Dong

Damon Pooley

Ethan Li

Grant Harvey

Jacky Mao

Jon Clark

Justine Chen

Lisa Hui

Mark Li

Nana Li

Pantea Wilson

Sam Arabi

Sara Wang

Tony Liu 24

OUR SALES SPECIALISTS

SALES TEAM - SANDRINGHAM OFFICE

Adam Humphris

Ashley Graae

Alastair Hubbard

Amy Tsai

Daniel Chen

Diane Goer

Emily Hu

Hugh Free

Ivan Koulin

Jackie Zhang

Kate Jiang

Rosa Solano

Susan Woods -Markwick

Tania Greer

Tracey Potter

Tim Cai

Yuhei Umezaki

OUR LOANMARKET MORTGAGE ADVISOR W E C A N N E G OT I AT E A LO W E R R AT E . W O R K W I T H A QUALIFIED AND COMPETENT MORTGAGE ADVISER

Tracey Warner LoanMarket Mortgage Adviser

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Create.

Recognise.

Grow.

The group with the family factor.

www.rwmtroskill.co.nz www.rwsandringham.co.nz