Auckland Central Market Report - Jan 2023

Auckland Central Market Report.

JANUARY 2023

Part of the group with a family factor.

CREATE RECOGNISE GROW

CITY REALTY GROUP

Contents.

04. Market Comment 06.

Article – Tony Alexander: Six reasons why the housing market won’t collapse in 2023 08. Auckland Central Statistics 10. Recent Sales November & December 16.

18. Auction Statistics & Update with Cameron Brain 20. Marketing your property 22. Ray White Auckland Central Meet the team

Article – Rupert Gough: 2022 was the year of mortgage pain – will next year be any better for buyers?

Market Comment. Ray White Auckland Central.

Auckland Apartment Report New Year

2023

The New Year is upon us and it’s a busy start in the Auckland central apartment market for City Realty Group says Director Daniel Horrobin.

Daniel says: “Investors are keeping a keen eye out for productive opportunities, there are good stock levels available, good numbers of auctions scheduled and demand for rentals is really picking up. After a strong finish to 2022 the momentum has carried over into the New Year with the signs encouraging it will continue through 2023”.

“The city apartment market often bucks the trends and although it is only early in the year, I believe there’s an active year ahead of us.”

He says there were even a decent number of sales over the couple of weeks which most Kiwis consider to be the Christmas break. About 70% of activity in the central Auckland apartment market is driven by investors, who tend to be alert to opportunity whatever the time of year.

With some vendors selling apartments because of other priorities and vendor expectations having become more realistic, savvy investors are active. This especially applies in the sub-$350,000 apartment segment. Investors are well aware that good buying can achieve superior yield percentages.

Demand for rentals is picking up and

with both international and domestic tourism flourishing again, there has been a big upsurge in the popularity of AirBnB properties.

Daniel describes the high level of demand with a recent example of a two bedroom CBD apartment of about 40 square metres, without parking asking $450 per week.

“We had around 70 applicants lining up to rent it, 95% of whom would be described as really good quality tenants.

“Young professionals are amongst those wanting to rent apartments, as are students. And with the borders opening up, we are getting more and more inquiries and rental vacancy rates are going down.”

Ray White Auckland Central licensed agents have their fingers on the pulse of the market and are ready to help both sellers and buyers on their property journey.

DANIEL HORROBIN

City Realty Group Director 021 595 976 daniel.horrobin@raywhite.com

Tony Alexander: Six reasons why the housing market won’t collapse in 2023

Despite the gloom, it’s highly unlikely house prices will fall another 13.7%.

ANALYSIS: Think back to what happened with house prices in 2021. They started the year with a hiss and a roar and gains averaging 3% a month in the March quarter. Then average rises slowed to 0.8% a month in the June quarter as people ruminated over the potential impact of new tax rules for investors and the return of LVRs.

But then, in the five month period from July to November, they rose by 2.2% a month on average despite net migration outflows, rising mortgage rates from June, and banks tightening lending rules. This last gasp surge in prices driven by a fall in listings to a record low of only 13,400 in July 2021 came to a grinding halt in the last two months of the year when two things happened.

First, from November banks were restricted to a maximum 10% of new loans involving less than a 20% deposit as opposed to 20%. Then, from the start of December changes to the Credit Contracts and Consumer

Finance Act came into force and banks became fearful of breaching rules aimed at loan sharks but rather sillily applied to them by the Government as well.

These two straws broke the camel’s back of the ridiculously soaring housing market and now prices have retreated on average 13.7%, annual sales have fallen 29%, and a long overdue “correction” is belatedly starting in the house building sector. My sympathies to those who are going to get caught out in the construction downturn. Why this recap? Because for the second year in a row two new things have happened and we need to ask ourselves whether they also are camel back-breaking events. The first was the higher than expected inflation number on October 18, which led to a round of near 0.5% increases in fixed mortgage rates. The second was the November 23 monetary policy tightening and scary recession words which caused another near 0.5% round of fixed rate rises and has shocked consumers into their shells.

Sales have fallen and house prices are in retreat but there powerful reasons to believe the worst of market decline has passed.

Will prices fall another 13.7%? No, principally because things are far less out of whack than back then. First, late in 2020 the ratio of house prices to incomes nationwide was 30% above levels immediately pre-pandemic. Now that ratio is only 4% above pre-pandemic levels courtesy of the house price falls already mentioned and strong wages growth such as the average 8.6% gain in the past year.

Second, in late-2021 net migration was -14,000 and worsening. Now the flow is -4,000 and getting better at a very rapid pace.

Third, back then monetary policy had only just been tightened. Now, we are less than four months away from the official cash rate peaking and given that bank funding costs for fixed rate lending already reflect an expectation of the cash rate hitting near 5.5%, extra upward pressure on those fixed rates has almost completely gone. We are probably at the peak of the fixed rate cycle and that is relevant for those looking to buy. Rolling off 2.5% onto 6.5% is relevant for those who have already bought a property and they are a completely different group of people.

Fourth, back then the stock of listings was rising and hit 19,000 at the start of December before reaching 28,400 in August this year. Now the stock is 26,500 and falling.

Fifth, banks are bit by bit easing their lending criteria as they learn to live with the CCCFA and falling real estate sales newly threatening lending and therefore profit targets will soon encourage some rate discounting to try and drum up new business.

Sixth, potential buyers have become scared of committing to new-builds because of the growing list of building business failures and the highlighting by media of lifetime savings lost by purchasers left out in the cold. Buyers are turning back to perusing the stock of existing properties.

There are other factors of lesser impact in the coming year such as the probable change in government bringing some investors back into the market. But these main ones already mentioned tell us that while prices are going to head lower still into winter 2023, the worst of the decline is behind us.

Then again, none of us picked soaring prices from June 2020, and none of us predicted prices falling 13.7% this past year. So, remember your bag of salt when reading “predictions” from analysts like myself regarding where prices are headed. They’re just guesses we hope to update quickly before they look silly.

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

Independent economist Tony Alexander: “While prices are going to head lower still into winter 2023, the worst of the decline is behind us.” Photo / Fiona Goodall

There

There

There was a 27% increase in the total median sale price year on year.

There was a 9% decrease in the total median days on market year on year.

Recent Sales.

ADDRESS

BEDROOMS SALE PRICE SALE DATE

2705/1 Courthouse Lane 1 $410,000 30-NOV-22 2605/1 Courthouse Lane 1 $409,000 30-NOV-22 2706/1 Courthouse Lane 1 $410,000 30-NOV-22

7J/14 Waterloo Quadrant 1 $60,000 30-NOV-22 6H/14 Waterloo Quadrant 1 $42,000 30-NOV-22 7C/25 Rutland Street 1 $60,000 29-NOV-22 503/9 Princes Street 2 $2,395,000 29-NOV-22 704/18 Beach Road 1 $95,800 29-NOV-22 231/6 Dockside Lane 2 $114,000 29-NOV-22 1520/2 Beach Road 3 $60,000 28-NOV-22 808/18 Beach Road 1 $130,000 28-NOV-22 141/6 Dockside Lane 0 $80,000 28-NOV-22 UBM/23 Hobson Street 1 $80,000 26-NOV-22 913/53 Cook Street 2 $380,000 25-NOV-22 1303/79 Airedale Street 2 $609,000 25-NOV-22 6H/1 Emily Place 1 $220,000 25-NOV-22 404/2 Dockside Lane 0 $110,000 25-NOV-22 4D/31 Day Street 2 $122,500 24-NOV-22 4D/31 Day Street 1 $122,500 24-NOV-22 8F/508 Queen Street 1 $85,500 24-NOV-22 707/11 Liverpool Street 2 $325,000 24-NOV-22 55/66-70 Emily Place 1 $398,000 24-NOV-22 4J/14 Waterloo Quadrant 1 $80,000 24-NOV-22 603/2 Dockside Lane 2 $139,000 24-NOV-22 5K/113 Vincent Street 2 $140,000 23-NOV-22 82GB Wakefield Street 1 $52,500 23-NOV-22

7E/8 Bankside Street 1 $269,000 23-NOV-22

38P/26 Te Taou Crescent $65,000 22-NOV-22 7H/14 Waterloo Quadrant 1 $95,000 22-NOV-22 101/26 Te Taou Crescent $65,000 22-NOV-22 12f/1 Greys Avenue 2 $1,500,000 21-NOV-22 5201/10 Commerce Street 3 $6,500,000 21-NOV-22 9J/205 Hobson Street 2 $756,000 18-NOV-22

AUCKLAND CENTRAL

ADDRESS

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

BEDROOMS SALE PRICE SALE DATE

1104/168 Hobson Street 2 $599,000 18-NOV-22 11D/1 Greys Avenue 0 $1,248,000 18-NOV-22 9a/1 Greys Avenue 0 $680,000 18-NOV-22 4B1/1 Greys Avenue 0 $1,488,000 18-NOV-22 5A1/1 Greys Avenue 0 $683,000 18-NOV-22 4E/31 Day Street 1 $70,500 17-NOV-22 4E/31 Day Street 1 $70,500 17-NOV-22 129/149 Nelson Street 1 $275,000 17-NOV-22 11A/196 Hobson Street 3 $1,240,000 17-NOV-22 101/1 Greys Avenue $184,500 17-NOV-22 2102/10 Waterloo Quadrant 2 $510,000 17-NOV-22 1107/10 Waterloo Quadrant 2 $400,000 17-NOV-22 518/133 Beach Road 1 $34,500 17-NOV-22 504/133 Beach Road 1 $34,500 17-NOV-22 10D/508 Queen Street 1 $85,000 16-NOV-22 1307/1 Parliament Street 2 $790,000 16-NOV-22 707/70 Daldy Street 2 $2,700,000 15-NOV-22 5A/30 Upper Queen Street 4 $700,000 15-NOV-22 503/79 Airedale Street 2 $710,000 15-NOV-22 601/18 Beach Road 2 $135,000 15-NOV-22 705/6 Dock Street 2 $749,000 14-NOV-22 5K/508 Queen Street 1 $75,000 14-NOV-22 13D/34 Kingston Street 2 $305,000 14-NOV-22 3M/23 Emily Place 1 $300,000 14-NOV-22 1303/30 Beach Road 1 $50,000 14-NOV-22 1106/1 Parliament Street 1 $610,000 14-NOV-22 604/85 Beach Road $430,000 14-NOV-22 6K/508 Queen Street 1 $75,000 13-NOV-22 501/149 Nelson Street 1 $345,000 11-NOV-22 7B/62 Queen Street 1 $250,000 11-NOV-22 1A/47 St Paul Street $690,000 11-NOV-22 605/2 Beach Road 2 $72,000 11-NOV-22 17/70 Daldy Street $2,700,000 10-NOV-22

Sales

NOVEMBER 2022

Recent Sales.

ADDRESS

BEDROOMS SALE PRICE SALE DATE

506/1 Hobson Street 2 $1,200,000 10-NOV-22 15B/76 Albert Street $80,000 10-NOV-22 15B & C/76 Albert Street 1 $80,000 10-NOV-22 56/145 Quay Street 1 $95,000 10-NOV-22 4C/1 Emily Place 2 $650,000 10-NOV-22 320/133 Beach Road 1 $28,500 10-NOV-22 1104/369 Queen Street 1 $550,000 9-NOV-22 1303/2 Beach Road 3 $310,000 9-NOV-22 416/145 Nelson Street 1 $420,000 8-NOV-22 3G/238 Karangahape Road 1 $630,000 8-NOV-22 7K/156 Vincent Street 1 $350,000 8-NOV-22 7D/11 A City Road 2 $100,000 8-NOV-22 502/9 Princes Street 2 $1,800,000 8-NOV-22 1602/32 Swanson Street 2 $495,000 7-NOV-22 6E/182 Federal Street $290,000 6-NOV-22 4F/55 High Street $503,500 5-NOV-22 107/369 Queen Street 1 $585,000 4-NOV-22 704/30 Beach Road 2 $68,000 4-NOV-22 2003/74 Albert Street 1 $487,500 3-NOV-22 407/105 Queen Street $345,000 3-NOV-22 8A/34 Kingston Street $310,000 2-NOV-22 83 Halsey Street 1 $260,000 1-NOV-22 GA/16 Market Place 2 $479,000 1-NOV-22 103/1 Greys Avenue $875,000 1-NOV-22 119/1 Greys Avenue $715,000 1-NOV-22 806/1 Greys Avenue $715,000 1-NOV-22 306/1 Greys Avenue $655,000 1-NOV-22 117/1 Greys Avenue $655,000 1-NOV-22 99/1 Greys Avenue $875,000 1-NOV-22 10E/4 St Paul Street 1 $315,000 1-NOV-22 1410/138 Anzac Avenue 1 $89,000 1-NOV-22

AUCKLAND CENTRAL

Recent Sales.

ADDRESS

BEDROOMS SALE PRICE SALE DATE

6A/1 GREYS AVENUE 1 $650,000 31-DEC-22 903/22 NELSON STREET 2 $1,310,000 23-DEC-22 224/85 CUSTOMS STREET WEST 1 $150,000 23-DEC-22 10C/6 DOCK STREET 2 $620,000 23-DEC-22 1I/14 WATERLOO QUADRANT 1 $80,000 23-DEC-22 412/11 UNION STREET 2 $190,000 22-DEC-22 10L/13 MOUNT STREET 1 $275,000 22-DEC-22 1013/10 WATERLOO QUADRANT 1 $196,900 22-DEC-22 219/149 NELSON STREET 2 $440,000 21-DEC-22 APT 902/45 UNION STREET 1 $780,000 21-DEC-22 2703/8 ALBERT STREET 3 $2,055,000 21-DEC-22 11A/25 RUTLAND STREET 1 $100,000 21-DEC-22 G6/47 HOBSON STREET 2 $593,000 20-DEC-22 4A/58 LIVERPOOL STREET 2 $98,000 20-DEC-22 1602/38 A LIVERPOOL STREET 3 $855,000 20-DEC-22 1405/10 COMMERCE STREET 1 $916,000 20-DEC-22 607/83 HALSEY STREET 1 $265,000 19-DEC-22 501/70 PITT STREET 2 $525,000 19-DEC-22 2A/11 B CITY ROAD 1 $59,000 15-DEC-22 2D/82 WAKEFIELD STREET 1 $60,000 15-DEC-22 905/147 NELSON STREET 2 $770,000 14-DEC-22 1F/16 MARKET PLACE 1 $95,000 14-DEC-22 G6/47 HOBSON STREET 2 $560,000 14-DEC-22 19D/34 KINGSTON STREET 2 $310,000 14-DEC-22 901/430 QUEEN STREET 2 $480,000 14-DEC-22 141/6 DOCKSIDE LANE 1 $80,000 14-DEC-22 4E/2 WHITE STREET 1 $70,000 13-DEC-22 307/32 SWANSON STREET 1 $418,000 13-DEC-22 8F/1 GREYS AVENUE 0 $660,000 13-DEC-22 102/8 RONAYNE STREET 0 $86,500 13-DEC-22 1107/18 BEACH ROAD 2 $120,800 12-DEC-22 103/11 UNION STREET 2 $352,000 9-DEC-22 1901/26 ALBERT STREET 1 $780,000 9-DEC-22 1912/10 WATERLOO QUADRANT 1 $280,000 9-DEC-22 1921/10 WATERLOO QUADRANT 0 $280,000 9-DEC-22

216/133 BEACH ROAD 1 $34,000 9-DEC-22 1103/145 NELSON STREET 2 $510,000 8-DEC-22 1F/14 UPPER QUEEN STREET 1 $65,000 8-DEC-22 17B/76 ALBERT STREET 1 $78,000 8-DEC-22 3C-3D/14 UPPER QUEEN STREET 2 $140,000 8-DEC-22 3301/1 COURTHOUSE LANE 3 $4,150,000 8-DEC-22 511/152 HOBSON STREET 1 $329,000 7-DEC-22 908/141 PAKENHAM STREET 2 $1,800,000 7-DEC-22 609/30 BEACH ROAD 1 $60,000 7-DEC-22 706/133 BEACH ROAD 1 $19,500 7-DEC-22 3A/508 QUEEN STREET 1 $87,500 6-DEC-22 513/22 NELSON STREET 1 $290,000 5-DEC-22 11A/88 ANZAC AVENUE 2 $590,000 5-DEC-22 G02/430 QUEEN STREET 2 $410,000 2-DEC-22 914/72 NELSON STREET 1 $172,000 1-DEC-22 7N/135 VICTORIA STREET WEST 2 $80,000 1-DEC-22

ANALYSIS: It has, without question, been a hard year for most homeowners with a mortgage. The cost of living is more than double the acceptable rate of inflation, mortgage interest rates are double what they were a year ago, and most Kiwi homeowners will have felt the additional cost of higher mortgage rates at some point this year as their fixed rates matured.

But what about those who are looking to buy in 2023? This year, borrowers were met with the strictest borrowing policies since 2008, making it extremely difficult to get on the property ladder. Will 2023 be any better? To forecast what borrowing will look like in the near future, we must first look at what got us to this position.

At the risk of minimising the pain caused by interest rate increases, the biggest brake on the market this year was the sudden withdrawal of finance due to last year’s changes to the Credit Contracts and Consumer Finance Act (CCCFA). “Withdrawal of finance” isn’t actually a

fair term as it insinuates that the banks volunteered to make borrowing more difficult. Instead, the banks had to adhere to the new rules that made it almost impossible to lend to most applicants.

This sudden inability for all but the very best applicants to get finance had two outcomes; it removed a significant percentage of the buyers from the market as their mortgage pre-approvals were declined, and shook the enthusiasm for those who were approved by the bank. Add in the mix the sharply increasing interest rates, and the property market that was boiling too hot just a few months earlier was suddenly very cold. Fast forward a year to today and believe it or not, things have got a little better for home buyers. A few tweaks to the CCCFA have meant that most people who rightly deserve a mortgage can now get one, albeit that they now have to meet a mortgage test rate - often referred to as the servicing rate - of 8%-9% rather than the 6.5%- 7% that was applied last year.

Rupert Gough: 2022 was the year of mortgage pain – will next year be any better for buyers?

Rupert Gough: “The buyers in the 2021 market could only dream of the market we’re in at the moment.”

Photo / Fiona Goodall

All that remains to hold back the market, therefore, is buyer hesitancy about how much higher interest rates will go and how low the price of houses will sink. The former - interest rate concern - is dwindling in buyer’s list of fears as interest rates seem to have stabilised at around 6%.

For anyone considering buying a home in 2023, the first step I would suggest is to find out how much you can afford under the current bank policies. There is almost no harm in asking the bank or your broker what your current mortgage affordability is. It’s unlikely that bank lending policies will change much in the next 12 months; if anything, they may relax a bit further, so finding out how much you can borrow today will probably let you know where you stand for all of 2023.

If you can’t borrow enough to purchase the house you want, find out what is holding you back. It is usually your deposit or your income/expenses. Take the next six to 12 months to work on this hurdle; either find a way to get more deposit through savings or family, or try to minimise your monthly expenses.

For those who can afford to borrow for a

home but find themselves hesitant to move ahead, take a moment to consider what the market was like 12 months ago: queues out the door at open homes, auction rooms full of hungry bidders. The buyers in the 2021 market could only dream of the market we’re in at the moment; a market where a buyer with finance can make an offer with no competing bids. Take advantage of this cool market and take your shot at purchasing a house you love. While there is the potential that house values could fall a further 5% or so, this would only be an issue for someone who wants to sell in the near future. History tells us that by the time we realise houses have reached the bottom and started to increase in value again, the open homes have started to fill again and you’ve missed out on the buyer’s market.

In short, I expect 2023 to be the year of the new norm. Interest rates should remain fairly close to where they are now and stay there, house prices may drop a little further but even out in the early part of the year. Bank lending policies will remain a little painful but shouldn’t get significantly harsher. This presents the best buying opportunity for a pre-approved buyer in years.

- Rupert Gough works for Mortgage Lab and is author of The Successful First Home Buyer.

Buyers with finance approval may find the housing market in 2023 to be less challenging. Photo / Getty Images

Auction updateAuckland Central

Auction front

While many have faced challenges our Auckland Central Auction Team has continued to raise the bar and has finished the year with a clearance rate of just over 70%, a figure that I am extremely pleased with when compared to our competitors.

Our Auction room has seen an increase in activity with Investors & Speculators returning to the market in a strong and positive way.

All signs are indicating that 2023 will be a very busy year for the Auckland Central team, with Auction Numbers looking very encouraging for January & February already.

On behalf of myself and the rest of the Ray White Auckland Central Auction Team, I would like to wish everyone a Merry Christmas and an Exceptional New Year.

2022 has proven to be a busy year on the

with just on 200 Auctions being conducted from our Auckland Central Office.

Marketing your home.

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.

A COMPREHENSIVE MARKETING STRATEGY TO REACH ACTIVE & PASSIVE BUYERS.

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.

Ray White Auckland Central.

Why choose us?

We’re on the Up-and-up.

Based in the heart of Auckland City, Ray White Auckland Central is an award-winning 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 Lorne Street & Wynyard Quarter offices are well positioned to maintain its leadership in the market.

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

Meet the team.

Jean Ooi

Jeong Lee

Director AML Officer Sales Manager Auckland Central

Auction Manager Sales Manager Wynyard Quarter

Daniel Horrobin

Cameron Brain Pauline Bridgman

Mike Richards Belinda Henson

Operations Manager

Jane Martin

Ady Huang Aileen Wu Chris Guilford Casey Chen Chris Cairns

Craig Warburton

David Lee Dom Worthington

Dusan Valenta Gillian Gibson

Habeeb Urrahman Iona Rodrigues

SALES TEAM - AUCKLAND CENTRAL OFFICE

John Min

Judi Yurak

Justin Choi Keisha Gutierrez Krister Samuel Leo Zhu

Lisa Zhang Louise Stephens

Marco Sahar

Mark Li May Ma

Michelle Yurak Nick Armstrong Ryan Bridgman

Sam Huang Siming Zhou

Steve King Steve Kirk

Gabriela Galateanu Max Beliak

Andrea Manni

Victor Liu