Ray White Auckland Central Market Report - January 2024

Auckland Central Market Report.

JANUARY 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 We’re Busy. “With a hiss and a roar, we’re underway”

Article – Tony Alexander: The good news first-home buyers may have missed in home loan shake-up.

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Auckland Central Statistics December 2023

Recent Sales December 2023

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Auction Statistics & Update with Cameron Brain

Article – Kelvin Davidson: Be All eyes on inflation: Why Wednesday’s figures could speed up interest rate cuts.

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Property Management Market Comment

LoanMarket: What can I expect in 2024?

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Marketing your property

Ray White Auckland Central Meet the team

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Market Comment.

Ray White Auckland Central.

Daniel Horrobin.

City Realty Group Director

021 595 976 daniel.horrobin@raywhite.com 4

We’re Busy.

“With a hiss and a roar, we’re underway” says Director of City Realty Group, Daniel Horrobin.

“We have more than 50 auctions booked up to the end of February for the City Realty Group as a whole, with the majority of those in our Central office” adds a delighted Daniel.

The positivity surrounding the property market is supported by a number of sources.

Perhaps the most revealing are statistics released by the Real Estate Institute comparing activity through their website in December 2023 with December 2022 (a year before).

In December 2023 REINZ saw: • • • •

8% more buyers visited the site 25% more enquiries on residential listings 19% more searches per listing 31% more engagements per listing

In addition to those positive signs is commentary such as that from Squirrel chief executive David Cunningham. He said interest rates should already have dropped, given the sharp fall in wholesale rates before Christmas.

“I would be surprised if we don’t see most fixed interest rates down between 0.5% and 1%

by March. Bank margins are very wide at the moment.”

Then, to top it off, was a December Beehive announcement, made by Nicola Willis on 20 December 2023, confirming the Coalition Government promises,.

“Today I am announcing our immediate decision to bring the brightline test for residential property back to two years, effective from 1 July 2024. Removing this effective capital gains tax means that properties sold after 1 July 2024 will only be subject to the rule if owned for less than two years.”

“I am also confirming the Government’s commitment to fully restoring interest deductibility for rental properties, with details of the phasing of this commitment to be the subject of an announcement in the New Year.”

Daniel says: “It is perhaps the second paragraph that will impact most on our Central City Apartment market, which is made up predominantly of investment properties.”

Rental demand remained strong over the break with extraordinary numbers of people turning up for well-presented properties. Daniel says there is a high standard of applicants for rentals.

“All indications are we are in for a busy 2024,” says Daniel.

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Tony Alexander: The good news firsthome buyers may have missed in home loan shake-up.

Everything you need to know about Debt to Income rules.

ANALYSIS: The Reserve Bank has just invited submissions by March 12 on its plans for introducing Debt to Income (DTI) rules for bank lending on residential property. We don’t know when the rules might start, only that the Reserve Bank will make an announcement around the middle of the year.

It proposes limiting banks to lending at a maximum of six times the before-tax income of a household looking for a new mortgage. For investors they propose a limit of seven times, but in both cases banks can still have a maximum of 20% of their new lending above these six and seven times

limits.

When the rules come in, will they make much difference in the housing market? Not until the next boom arrives.

According to data provided by the Reserve Bank, on average over the past six months only 7% of new lending to first-home buyers has exceeded the six times limit. For all other owner-occupiers the proportion is 10% and for investors 8% exceeded seven times income. Looking at those low percentages, which are well away from 20%, you might think there is no point having the rules. Not so fast.

When the New Zealand housing market

Under the new Debt to Income rules, buyers will face restrictions on how much they can borrow from their bank.

Photo / Fiona Goodall

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was booming over 2020-21, the peak monthly proportion of new lending to first-home buyers which exceeded six times income was 28%. For other owneroccupiers the peak was 36% and for investors 37%.

It is when things boom that the new DTI rules will become binding and the impact will be to restrict the pace of house price growth. This will help reduce the risk of households taking on excessive debt and potentially being caught out badly when conditions change. In this way DTIs will limit both the booms and the busts.

But they will probably also lengthen the period during which prices rise at a firm pace (let’s say 10-15% per annum rather than 20%) as frustrated buyers have to wait for their deposit to grow before making a purchase.

Speaking of deposits, here is where things get interesting for first-home buyers. At the same time as the DTIs get introduced, the Reserve Bank intends letting banks have up to 20% of new lending where the deposit is less than 20% property value for owner-

occupiers. The current limit is 15%.

It also proposes cutting the minimum deposit for investors from 35% to 30%.

But the main point to note is this. Put aside the fact that for the moment high interest rates mean a lot of people cannot make a purchase because debt servicing is too high a proportion of their income. For many young people the biggest constraint is lack of a sufficiently large deposit.

Saving a deposit can take a long time.

Having more bank lending able to be undertaken with less than a 20% deposit is going to be of strong benefit to first-home buyers.

Therefore, when the DTIs come in, the situation for first-home buyers overall will actually get better. The DTI rule for most won’t matter but better low deposit access to funds will be positive.

When might this easing of LVRs happen?

Probably before the end of this year and potentially mid-year. Banks have now had plenty of time to get systems in place to handle a DTI regime.

Independent economist Tony Alexander: “Buying to beat price rises is a powerful motivator.”

Photo / Fiona Goodall

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DECEMBER 2024

Market Statistics.

Total Sales

Median Sales Price

December 2023

December 2023

December 2022

December 2022

There was a -43% decrease in the total number of sales year on year.

There was a 24% increase in the total median sale price year on year.

Total Sales Value

Median Days On Market

December 2023

December 2023

December 2022

December 2022

There was a -63% decrease in the total sales value year on year.

There was a -8% decrease in the total median days on market year on year.

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$23,140,611 $40,998,145

$399,000 $319,500

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Source: REINZ 9

Recent Sales.

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AUCKLAND CENTRAL

ADDRESS

BEDROOMS

SALE PRICE

SALE DATE

201/70 DALDY STREET 614/72 NELSON STREET 2B/11 PAKENHAM STREET EAST 1606/10 WATERLOO QUADRANT 13G/2 EDEN CRESCENT 204/85 DALDY STREET 1502/53 COOK STREET 509/125 CUSTOMS STREET WEST 709/207 FEDERAL STREET 3008/1 COURTHOUSE LANE 2011/11 LIVERPOOL STREET 6A/14 WATERLOO QUADRANT 206/45 UNION STREET GI/22 PAKENHAM STREET EAST 901/9 PRINCES STREET 213/57 MAHUHU CRESCENT 627/149 NELSON STREET 1014/135 HOBSON STREET 406/135 HOBSON STREET 1602/75 VICTORIA STREET WEST 5A/85 HALSEY STREET 2D/2 WHITE STREET 11H/1 EMILY PLACE 712/72 NELSON STREET 4E/198 FEDERAL STREET 4/21 DAY STREET 612/430 QUEEN STREET 425+607 133 BEACH ROAD 8E/82 WAKEFIELD STREET 1507/10 COMMERCE STREET 410/8 RONAYNE STREET 302/149 NELSON STREET 212/188 HOBSON STREET 8J/34 KINGSTON STREET 3B/24 MARKET PLACE 2205/26 ALBERT STREET 116/149 NELSON STREET 807/17 VOGEL LANE 318/35 HOBSON STREET LBW/23-31 HOBSON STREET 1203/30 BEACH ROAD

$1,980,000 $177,500 $500,000 $540,000 $485,000 $1,650,000 $399,000 $215,000 $486,000 $1,225,000 $150,500 $120,000 $643,500 $140,000 $2,388,000 $142,800 $500,000 $210,000 $260,000 $788,000 $1,425,000 $123,000 $176,111 $400,000 $685,000 $610,000 $300,000 $88,000 $57,200 $729,000 $90,000 $330,000 $250,000 $310,000 $755,000 $2,400,000 $470,000 $338,000 $515,000 $49,000 $40,000

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28-DEC-23 22-DEC-23 22-DEC-23 22-DEC-23 22-DEC-23 21-DEC-23 21-DEC-23 21-DEC-23 21-DEC-23 21-DEC-23 19-DEC-23 18-DEC-23 15-DEC-23 15-DEC-23 15-DEC-23 14-DEC-23 13-DEC-23 13-DEC-23 13-DEC-23 11-DEC-23 8-DEC-23 8-DEC-23 8-DEC-23 7-DEC-23 7-DEC-23 6-DEC-23 6-DEC-23 6-DEC-23 6-DEC-23 6-DEC-23 6-DEC-23 5-DEC-23 5-DEC-23 5-DEC-23 4-DEC-23 4-DEC-23 1-DEC-23 1-DEC-23 1-DEC-23 1-DEC-23 1-DEC-23

3 1 1 0 4 2 2 0 1 1 2 1 2 2 2 2 2 1 1 1 1

DECEMBER 2023

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

Total Sales

By number of bedrooms 1 Bed (or Studio)

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2 Bedrooms

19

3+ Bedrooms

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Median Sale Price By number of bedrooms 1 Bed (or Studio)

$177,500

2 Bedrooms

3+ Bedrooms

$500,000

$1,055,000

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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:

A Promising Outlook for Property Enthusiasts The real estate market has set an exhilarating pace as we step into 2024, showcasing a vibrant landscape for property auctions.

2023 exceeded expectations with 381 auctions listed, representing an impressive 31% of all properties listed during the year. Furthermore, the clearance rate culminated at an impressive 71%, signaling robust demand and a buoyant market sentiment.

As we venture into the new year, the horizon appears even more promising, with the Ray White City Realty Group leading the charge. The auction numbers for January and February alone have surpassed expectations, with over 50 auctions already listed and booked. Of particular note is the commendable performance of the Auckland Central Team, contributing 32 auctions to the tally, predominantly focusing on the dynamic apartment market.

strong demand is a testament to the enduring appeal of property as an investment and the resilience of the real estate sector.

The variety of apartments on offer in these auctions is as diverse as the city itself. Ranging from remedial properties with expected prices between $50,000 to $100,000, to luxurious residences in prime suburbs anticipating interest exceeding $8,000,000, the market caters to a wide spectrum of buyers. This diversity not only reflects the dynamism of the real estate scene but also presents opportunities for both seasoned investors and those stepping into the property market for the first time.

As the real estate landscape continues to evolve, the auction platform remains a preferred choice for both buyers and sellers. It provides a transparent and efficient mechanism for property transactions, fostering healthy competition and ensuring fair market value is achieved.

Buyer enthusiasm has already been palpable across all price points, indicating a robust and competitive market environment. The

Looking ahead, 2024 promises to be a busy and thriving year for those considering selling their properties. The early success of auctions in January sets an optimistic tone for the remainder of the year. Sellers can capitalise on this momentum, leveraging the buoyant market conditions to achieve favorable outcomes.

The Ray White City Realty Group’s commitment to excellence is evident in the impressive auction numbers, reflecting a market that is both dynamic and resilient.

Whether you are a buyer or a seller, now is an opportune time to engage in the property market, with auctions emerging as a key driver of success in the real estate arena.

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Kelvin Davidson: All eyes on inflation: Why Wednesday’s figures could speed up interest rate cuts.

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

1. All eyes on CPI And finally, the key data release by a country mile this week is Q4 inflation from Stats NZ on Wednesday. The Reserve Bank has forecast that consumers price inflation (CPI) will be an annual rate of 5% in Q4’s numbers (down from 5.6% in Q3), so any result higher than 5% would present a risk that the Official Cash Rate might need to rise again – especially if it reflected non-tradable/ domestic pressures such as rents.

Equally, anything less than 5% would calm

the nerves about another OCR rise. My own hunch is that it’ll be a bit less than 5%, but the recent global issues around conflict and higher shipping costs are a clear concern.

Watch closely on Wednesday!

2. Rental market is still favouring landlords Stats NZ’s figures last week showed that rents on the flow/new tenancy measure were 7% higher in December than a year ago, accelerating again after a couple of slightly slower months. With net migration (and hence property demand) high and the

Annual Inflation Since 1990 The chart shows the annual change in the consumers price index. Figures are for June 1990-Sep 2023 quarters.

Chart: NZ Herald. Source Stats NZ.

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supply of rental properties relatively tight, this combination is pushing up rents – good for landlords, not for tenants. Admittedly, rents are already quite high in relation to household incomes, so the growth may have its limits. But for now, it does seem that rents will continue to rise in the short term.

3. First-home buyers are still enjoying conditions New figures show first-home buyers’ share of property purchases is still high, with the latest CoreLogic Buyer Classification report registering a 27% share in December and across Q4 as a whole (and Q3 too).

The number of deals is on the rise as well.

Those market share figures are record highs, driven by many factors, including access to KiwiSaver for at least some of the deposit, a willingness to compromise on property type/location, making full use of the low deposit lending allowances at the banks, and reduced competition from other buyer groups.

Indeed, given high deposit requirements, low gross rental yields, elevated mortgage rates, and less favourable deductibility/ bright-line tax settings (for now), mortgaged multiple property owners – including investors – are still only accounting for about 21-22% of activity. Clearly, that’s not a complete abandonment of the market; some investors are still getting the sums to work. But that market share figure is

nevertheless below the norm of 25-26% for mortgaged MPOs and well down on the most recent cyclical peak of 28% in Q1 2021.

4. Property values up in December Despite their continued strength in recent months, some would-be first home buyers may not be quite so pleased about the growth now being seen for property values. The CoreLogic House Price Index rose by 1% in December, pushed along

by Auckland, Tauranga, and Christchurch, although a bit patchier in some other areas such as Gisborne and Napier. With mortgage rates still high, our expectation remains that 2024 will see only a slow recovery by past standards, with prices variable from month to month, and from region to region.

5. Sales activity up, but from a low base Part of that general sluggishness for property values could reflect a relatively subdued housing market in terms of sales volumes, which are still low, albeit rising.

Our data for December showed that volumes across both agent-led and private sales were up by nearly 30% from the same month last year, but still about 25% lower than normal. In other words, more deals are starting to happen, but they’re nowhere near back to regular volumes yet.

CoreLogic chief economist Kelvin Davidson: “It does seem that rents will continue to rise in the short term.”

Photo / Peter Meecham

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Market Comment.

Property Management.

Superb.

SuperCity Property Management

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Have you recently assessed your existing rent situation?

One of our new clients did.

Our rental team has recently taken on board an inner city apartment from a competitor. We conducted a thorough market review to ensure that our clients received the best possible result from their investments.

Another happy SuperCity client!

We conducted a thorough market review of the rent which was set at $380 per week. Indicative of the Covid era pricing. The rent has now been reviewed and increased to $520 per week. One very happy landlord.

If you would like a no-obligation review of your current rental please feel free to reach out !

NEW CLIENT CASE STUDY

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$520.00 per week

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We have a great team of professional Property Managers, Letting Agents, Accounts Managers and Administrators with specific specialised

37%

increase

roles to ensure that you receive the best possible service.

Talk to us today!

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

What can I expect in 2024?

As we start another year, several conflicts are still occurring worldwide, which is unfortunate for anyone with ties to those countries involved. This will continue to impact several economies, not just their own.

Inflation is still running at levels many countries do not like to see, so they will strive to bring this under control, no more so than here in New Zealand.

It was good to see some of the banks easing back on their medium-term (2-3 year) rates before Christmas, but this was nothing more than a small quantity of Christmas cheer to gain some free media coverage, given that very few mortgage holders have been fixing for more than 12-18 months.

These are my 3 top predictions for 2024:

growth will persist, with major cities experiencing strong gains.

Price growth is set to continue – and it is no surprise!

After a subdued market over the last 18 months, we expect house prices to continue to rebound somewhere between 5-10% in the next year. The combination of ongoing population growth and a shortage of new dwellings has helped mitigate the impact of rising interest rates. As interest rates approach their peak, it is anticipated that price

Interest rates are peaking – what goes up will come down.

Inflation remains relatively high, as mentioned above, but is starting to trend down. I believe we are unlikely to see any more interest rate increases this year. If the inflation rates in NZ come back

with the cost of living dropping, then we will see the Reserve Bank start easing the Official Cash Rate, and interest rates will start reducing. This, in our view, might come a little earlier than predicted by some of the economists. (possibly by the second or third quarter of this year as opposed to the beginning of 2025, as most have predicted) The return of investors to the market - As mentioned above, the unwinding of the tax rules introduced by the last government will see investors return to the

market. As interest rates reduce and rents continue to rise, it will make the investment market more attractive again to Mum and Dad investors who provide many houses to renters in the New Zealand market.

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.

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.

0800 002 420

www.rwaucklandcentral.co.nz

Leaders in the Auckland Apartment & Residential market.

City Realty Limited (Licensed REAA 2008)

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Meet the team.

Daniel Horrobin Director

Cameron Brain Auction Manager

Pauline Bridgman

Mike Richards

Belinda Henson

AML Officer

Sales Manager Auckland Central

Sales Manager Wynyard Quarter & Mount Roskill

OUR SALES SPECIALISTS

SALES TEAM - AUCKLAND CENTRAL OFFICE

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Ady Huang

Aileen Wu

Amit Rana

Ben Parkes

Bosen Han

Carl Russell

Casey Chen

Cheryl Whiting

Chris Cairns

Chris Guilford

Craig Warburton

Daniel Boderick

Danika Ansley

Derek Yin

Dom Worthington

Dusan Valenta

Gillian Gibson

Grant Elliott

Habeeb Urrahman

Holly Cassidy

Jeong Lee

Judi Yurak

Keisha Gutierrez

Krister Samuel

Kristine Liu

OUR SALES SPECIALISTS

Leo Zhang

Leo Zhu

Lisa Zhang

Marco Sahar

Michelle Yurak

Nick Armstrong

Ryan Bridgman

Sam Huang

Steve King

Steve Kirk

Our strongest team yet.

Selling right across Auckland Central & City fringe

Ross Tierney

S A L E S T E A M - W Y N YA R D Q U A RT E R O F F I C E

Andrew Bond

Ainsley Lewis

Louise Stephens

Max Beliak

Gabriela Galateanu

Jorvarn Hicks

SALES TEAM - MOUNT ROSKILL OFFICE

May Ma

Salesperson & Director Mount Roskill

Mark Li

Lisa Hui

Sara Wang

OUR LOANMARKET MORTGAGE ADVISOR

Jamie Maclennan

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

LoanMarket Mortgage Adviser

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Create.

Recognise.

Grow.

The group with the family factor.

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