Ray White Auckland Central June Report

Auckland Central Market Report.

Part of the group with a family factor.

Contents.

04. Market CommentGoodbye to OCR increases?

06.

Article – Kelvin Davidson: Why more house-buyers are hedging towards shorter fixes.

08. Auckland Central Statistics May 2023

10. Recent Sales May 2023

12. Auction Statistics & Update with Cameron Brain

14. Article – Diana Clement: Experts on how much house prices will rise now they’ve hit the bottom.

16. Property Management Market Comment

20.

Marketing your property

18. LoanMarket Update

22. Ray White Auckland Central Meet the team

Market Comment. Ray White Auckland Central.

Goodbye to OCR increases?

As many predicted, the Reserve Bank of New Zealand has signalled that it is now done raising the official cash rate, following late May’s 0.25 percentage lift to 5.5%. The RBNZ doesn’t expect to start cutting the rate until late-2024 and according to economic commentator Tony Alexander there is a reasonable chance it will start before that – maybe early next year.

Director of City Realty Group, Daniel Horrobin, says: “With a general election to navigate later this year it would appear unlikely there will be any significant movement before then.”

May saw the number of properties for sale in the CBD tighten, with healthy rents no doubt a persuasive factor in owners’ decisions to retain them rather than put them on the market. Sales activity for the month of May in Auckland Central was a direct reflection of the tight stock availability.

“As we know, our CBD market ignores traditional residential seasonal influences and is more reflective of economic and financial conditions prevailing at any given time,” says Daniel.

Auction activity for May in Ray White’s Central City office remained steady with sellers for the most part willing to negotiate in order to secure a sale on the day.

The big news for the apartment sector this past month has been new disclosure requirements introduced on May 9 following a major overhaul of the Unit Titles Act. The amendments impose significant additional responsibilities on body corporates and owners on the amount of information that MUST be provided to buyers of Unit Title properties (eg.apartments) prior to entering into a sale agreement.

These requirements were well-signalled before the implementation date of May 9, with no transitional period granted. However, a number of body corporates appear to have been caught scrambling to deliver the necessary documentation. As we head into June there is still some settling in to do around these requirements but we are hopefully over the honeymoon blues, says Daniel.

On the rental scene, rents continue to hold steady at very healthy levels for owners. As a result, conditions are extremely disheartening for those searching for accommodation. We have reports of 30 to 40 attendees at viewings for rental properties which is virtually underheard of in our central city market. A prime driver of demand for rental property is the annual net migration gain at an all-time high at 65,400 for the year ending March 2023, with the net gain in March alone being 12,100. It would be fair to say a large proportion of these people target our largest city.

As the winter months loom, it’s business as usual for Ray White’s licensed agents who are well equipped to help both sellers and buyers on their property journey, being well-briefed on market dynamics and the intricacies our city apartment market presents.

Daniel Horrobin.

Kelvin Davidson: ‘Why more housebuyers are hedging towards shorter fixes.’

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

1. Mortgage rates have likely peaked, but not set to fall much either

The latest aggregated mortgage rate figures from the Reserve Bank showed a stabilisation for the “special” (high equity) one year fixed rate in May, at around 6.7% (remember the days of 2.2% in June 2021?!) With the official cash rate now likely to be flat at 5.5% for several months to come, it’s almost certain now that mortgage rates have peaked. But an extended plateau for the OCR implies similar for mortgage rates, so household budgets will still be under pressure.

2. Most borrowers still fixing for 1-2 years

The RBNZ has recently released a fresh dataset, which shows the terms for new mortgage lending, i.e. whether loans each month are floating or fixed, and if fixed, how long the term is. Previously we only knew whether existing loans were floating or fixed,

and how long the fixed loans had to their next repricing. There’s still some work I’ll be doing to get the full potential out of this new data, but for now, one initial insight is that recently a rising share of new lending has been going out on fixed terms of up to two years – through late 2021 and early 2022, that proportion was in the range of 50-60%, but over March and April this year it has hit 75%.

Now, as noted above, I’m not convinced that mortgage rates are about to drop significantly anytime soon. But even so, given that the peak has at least now arrived (give or take), many people are probably still (sensibly) choosing to fix for shorter periods just in case we do see some modest rate falls over a 2-3 year horizon. Similarly, those shorter fixes still remain pretty competitive in terms of the mortgage rates associated with them too.

Data from the Reserve Bank of New Zealand shows the bulk of new lending is being fixed at terms of two years or less.

Photo / Fiona Goodall

3. ‘More of the same’ for buyer market shares in May

The latest buyer figures for May are really just ‘more of the same’. First home buyers were still a solid presence last month (at around the 24-25% mark), with cash multiple property owners also holding on well, but mortgaged multiple property owners were battling. Challenges such as low rental yields, high mortgage rates, LVR restrictions, and the removal of interest deductibility are certainly making it tricky to get the sums to stack up on an extra/first mortgaged investment property at present.

4. Landlords will still be watching migration flows

On Tuesday this week Stats NZ will publish April’s net migration data, with rent price figures for May due on Wednesday. Recently, rental growth has remained relatively subdued (after a previous burst of strong increases), even as net migration has rocketed higher. But you do have to wonder how long it will be until rental growth

potentially starts to accelerate again, given that a fair proportion of new migrant arrivals to NZ will probably go into rental accommodation at least for a start.

5. Were we in recession in early 2023?

The highest-profile economic data release this week will be the Q1 GDP figures on Thursday morning, which may show that we were in a recession at the start of the year. But of course, it’s “old news” and even if doesn’t show a technical recession (which is defined as two quarters of falling GDP), it’s obviously still pretty tough out there for many people at present – that is, it probably still feels recessionary. The good news is that most forecasters think GDP will now gradually expand over the next year or two, and in any case, the labour market has stayed strong regardless – flowing through to some degree of insulation for the property market.

- Kelvin Davidson is chief economist at property insights firm CoreLogic

CoreLogic chief economist Kelvin Davidson: “Shorter fixes still remain pretty competitive in terms of the mortgage rates associated with them.” Photo / Peter Meecham

Market Statistics.

Total Sales

May 2023

May 2022

May 2023

$387,500

May 2022

There was a -33% decrease in the total number of sales year on year.

Total Sales Value

66 $36,581,300

May 2023

May 2022

99 $54,381,520

There was a -32% decrease in the total sales value year on year.

Source: REINZ

$400,000

There was a -3% decrease in the total median sale price year on year.

Median Sales Price Median Days On Market

May 2023

50

May 2022

46

There was a 8% increase 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.

Auction Wrap.

The auction market for Ray White City Realty Group has shown impressive performance and promising trends from January to May. Throughout this period, a total of 139 auctions were conducted, indicating a robust level of activity in the market. Notably, an average of 2.02 bidders participated in each auction, reflecting healthy competition among buyers.

The clearance rate for the year-to-date stands at an encouraging 64.03%. This indicates that a significant portion of properties put up for auction have been successfully sold, providing positive outcomes for both sellers and buyers. Of the properties that were sold, a notable 36.69% were sold under the hammer, demonstrating the effectiveness of the auction method in generating successful transactions.

One notable development in the market is the resurgence of first home buyers. The return of this buyer segment is a positive sign for the real estate industry, as it indicates growing confidence among individuals entering the property market for the first time. This increased participation has contributed to the strong competitive bidding witnessed across all properties included in auction campaigns. Furthermore, the market sentiment suggests that now is an opportune time to buy. This feeling of urgency has likely been fueled by factors such as favorable interest rates,

positive economic conditions, and a growing sense of stability. As a result, more preauction offers are being presented than at any other time this year. This trend indicates a proactive approach from buyers who are keen to secure their desired properties before they reach the auction stage.

Overall, Ray White City Realty Group’s auction market performance from January to May has been notable. The high number of auctions conducted, coupled with a healthy average number of bidders, reflects a dynamic market environment. The solid clearance rate, with a significant proportion of properties selling under the hammer, further strengthens the case for auctions as an effective sales method. The resurgence of first home buyers and the prevalent belief that now is the time to buy contribute to a positive market outlook. With the increasing number of preauction offers being presented, the market is characterized by active buyer engagement and a sense of opportunity.

Diana Clement: Experts on how much house prices will rise now they’ve hit the bottom

The housing market slump is over. The consensus of the country’s bank economists is that prices have hit or are close to hitting rock bottom – although what happens next is less clear. Homeowners who are expecting prices to bounce right back after a near 18% drop may have to wait for the market to come back to life again.

Post-Covid, the nationwide median house price jumped nearly 50% from trough of $620,000 to a peak of $925,000 in November 2021, fuelled by record low interest rates, lower loan to value ratios and border restrictions. However, Kiwis are unlikely to see that potent mix of inflationary factors again any time soon.

BNZ chief economist Mike Jones believes house prices will “bobble along the bottom a bit for a while”, with “high mortgage rates, stretched affordability, and sluggish economic conditions all look set to hold back the upturn”.

Jones expects to see house price growth resuming over the second half of this year, with modest rises of 1-1.5% across the board per quarter. Kiwis should expect some

“near-term jostle in the month-to-month housing numbers”, he says, adding that some regions may be slower to the revival.

And even though the Reserve Bank has signalled that 5.5% is as high as the official cash rate will go, there is a large number of mortgage-holders who have yet to roll onto higher rates, and first-home buyers face high test rates, which will put a limit on how much they can spend. “RBNZ data show the major banks are testing new borrowers on 8.5-9.0% mortgage rates, and rates don’t look like they’re going to come down any time soon,” Jones says.

Another factor to bear in mind is that houses, while cheaper than they were in 2021, are still far from “cheap”.

“Bear in mind that, if we’re right on this, NZ house prices would be levelling out at still very high levels. About 20% up on preCovid levels in fact, and still elevated on any number of valuation metrics,” says Jones.

Kiwibank chief economist Jarrod Kerr, who had been predicting a 20% fall in prices from peak to trough, thinks the market is “very

Most bank economists expect only marginal house price growth this year. Photo / Getty Images

Interest rates and migration the key drivers to watch.

close to the bottom”, but he’s still waiting for spring data to get a better handle on what’s happening. “That will be the litmus test,” he says.

Kerr says he can see some green shoots emerging in the housing market. “What we’re hearing from people on the frontline is things are changing.” The biggest influencing factor for the market is the outlook for interest rates. “If the RBNZ has reached the peak in the cash rate, with rate cuts coming next year, then the strong headwind of higher mortgage rates will turn into a tailwind,” he says.

How fast those rates will come down the other side depends on a variety of economic factors. “The central view is that the RBNZ will start cutting rates from February next year, and slowly take the cash rate back towards a neutral 2.5% setting,” says Kerr. Westpac senior economist Michael Gordon believes that New Zealand’s average house prices have now bottomed out. “Interest rates near their peaks and the resurgence in migration provides a fresh source of demand,” Gordon wrote in the bank’s latest economic update.

“We’re forecasting only a modest lift in prices from here on, but we’ll watch the data carefully. History shows that it’s difficult to predict how far the housing market will go once it starts to gain some momentum.”

ANZ’s economists believe the market has hit the bottom but it doesn’t expect prices will stop falling in every region. “Some ‘catchdown’ is expected.

“Prices are down on an annual basis in every

main region, but there is still significant regional divergence. Wellington is the clear under performer, with prices down 18.4% y/y on a 3-month moving average basis, and Auckland not far behind at -15.4% y/y. Southland is the outperformer, with prices down 5.1% y/y.”

The divergence is the differing increases in house prices in different regions during the Covid boom, the timing of those regional booms, and population growth, the ANZ economists say.

They note that the uptick in auction clearance rates in Auckland suggests the country’s largest market is coming back to life. “With net migration surging to new highs and the residential construction sector slowing on the back of rising interest rates, new demand for housing is now significantly outstripping new supply. In other words, New Zealand has a widening housing deficit. ”

ASB chief economist Nick Tuffley thinks that house prices “are at or close to the bottom” and points out that even if we have hit rock bottom, prices are still 19% higher than at the start of 2020 when the pandemic hit. He pointed to his colleague Nathaniel Keall’s forecast in April, which was still the team’s current view: “From the trough we expect marginal growth at the end of 2023, and for prices to rise around 7.5% over 2024 and 16% over 2025. The sharp surge in migration is a key factor in both stabilising house prices and then driving them up, coupled with the start of falls in interest rates over 2024”.

Kiwibank chief economist Jarrod Kerr: “What we’re hearing from people on the frontline is things are changing.”

Photo / Fiona Goodall

Market Comment. Property Management. Superb.

SuperCity Property Management

Property Management Comment: May/June 2023

The Rental market continues to be strong, driven by low levels of supply compared to demand leading to an increase in rents year on year.

The demand for rental property is continuing to gain more strength with the annual net migration gain at an all time high at 65,400 for the year ending March 2023 and the net gain in March alone being 12,100.

The total Rental stock in April across the country was down 19% while demand was up 36% compared to the same time last year.

In Auckland Rental listings were down 36% year on year adding pressure to a tight market.

The National Median weekly Rent increased by 3.4% in April compared to the same time last year, in Auckland the Median weekly Rent increased by 8.3% with Apartments seeing the biggest increase of 12% year on year.

2023 figures show rents for apartments and small houses (1-2 bedroom) were soaring. Nationwide the median weekly rent for an apartment was up 8 per cent year-on-year to $540 per week.

Demand for rentals for smaller properties continued to rise by 27 percent across the country. Otago (+46%) and Auckland (+44%) both streaked ahead as the most popular

regions for tenants to be looking for a place to live.

Locally, the ongoing cost of living means people are looking for cheaper places, allowing their paycheck to go further. Also the way people are living their life is changing - staying single for longer, or choosing to not have children, so they don’t need the extra space.

This combined with growing migration figures (skilled migrants and international students making up a large part of this) is putting pressure on an already active market.

This was leading to a growing demand for apartments and small houses with demand up 55 per cent on the previous year on the Trade Me website. Looking at the net migration figures and projections, we are positive that the positive trends we have seen so far this year will continue.

Proven strategies for paying that mortgage off faster!

When you take out a mortgage, you’re agreeing to make regular payments over a period of up to 30 years.

During that time, a significant portion of your income will go towards paying off the interest on your loan, which can feel like an endless cycle.

However, it’s important to remember that your home is a valuable asset that can appreciate over time so by paying off your mortgage faster, you can build equity in your home and increase your net worth. Plus, you’ll have the peace of mind that comes with owning your home outright.

How to Pay Your Mortgage off Faster.

Right now you may be faced with higher repayments if you are having to refix your mortgage at a higher interest rate, so most of your extra money will be going towards making up for the higher repayment amount. You may have had to find ways to find more money by cutting back on your expenditure or even getting a flatmate or boarder to help cover the extra cost.

So now that you’ve gone to all this trouble to help you afford the increased repayments, why not keep that going and maintain the higher payment amount once interest rates start to reduce?

If you can, then a larger portion of your repayments will go towards the principal helping you to pay down that mortgage faster.

Then the next time you need to refix at a higher rate, the mortgage will be a lot lower and you hopefully won’t have to make major adjustments to your finances to compensate.

A little forward thinking now, could end up saving you thousands of dollars in interest and shave years off your loan term - in hindsight that’s possibly what borrowers are thinking they should have done when rates were 2.99%!

While paying off your mortgage faster can be a smart financial move, it requires discipline, dedication, and a long-term mindset so here are a few top tips to help you get on track

Fortnightly payments

Instead of making one monthly payment, consider switching to fortnightly payments equal to the

monthly amount.

By paying every two weeks instead of every calendar month, you’re effectively making two extra fortnightly mortgage repayments per year.

This can help you pay off your mortgage faster and reduce the amount of interest you pay.

Rounding up your repayments

For example, if you’re paying $1,580 a fortnight, round it up to $1,600. That’s an extra payment of $20 per fortnight (or 3 double shot flat whites) which may not seem like much, but could actually save you thousands of dollars in interest over the life of your loan!

Consider repaying your mortgage as though it’s on a shorter term

If you’re on a 30-year term, calculate your repayments as though it’s only 25 years. With the right structure in place, you can pay your loan off sooner while still having the flexibility to easily lower your repayments in the future if you need to.

Adjusting the loan repayment to reflect a loan term of 20, 25, or 30-years may seem daunting, but by having

the right structure in place, regularly reviewing your repayments, and utilising your savings wisely can see you pay your mortgage off years earlier than anticipated and save thousands of dollars in interest costs along the way.

If you, or someone you know, would like to check their borrowing power for a new purchase, check the market out for a great refinance deal, top up for renovations, upgrade the car, or discuss anything to do with finance, insurance, KiwiSaver or international money transfer, let me know. I’m here to help, and as a mortgage adviser my experience, industry knowledge and service comes at no cost to you.

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 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.

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.

Meet the team.

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 Ben Parkes

Craig Warburton David Lee

Dom Worthington Dusan Valenta Gillian Gibson Habeeb Urrahman

SALES TEAM - AUCKLAND CENTRAL OFFICE

Chris Guilford

Casey Chen Chris Cairns

Grant Elliott

Cheryl Whiting

Bosen Han

Judi Yurak

Keisha Gutierrez Krister Samuel

Holly Cassidy Jeong Lee

OUR LOANMARKET MORTGAGE ADVISORS

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

Our strongest team yet. Selling right across Auckland

Kristine Liu Lisa Zhang Marco Sahar

Mark Li May Ma

Michelle Yurak

Nick Armstrong

Ryan Bridgman Sam Huang

Steve King

Steve Kirk

Central & City fringe Jorvarn Hicks

SALES TEAM WYNYARD QUARTER OFFICE

OUR SALES SPECIALISTS

Victor Liu

Gabriela Galateanu

LoanMarket Mortgage Adviser LoanMarket Mortgage Adviser

Craig Pettit Laurie Warren

Max Beliak

Nicholas Dallyn

Ross Tierney

Leo Zhang Leo Zhu

Sunniva Gu