Residential Market Report.
04.
Market CommentChaos Reigns - Or Does It?
06.
Article – Tony Alexander: The return of the housing market slump - who’s to blame?
08.
Sandringham Sales Statistics May 2024
12.
Auction Update with Cameron Brain
16. Property Management Update
10. Mount Roskill Sales Statistics May 2024
14.
Article – Kelvin Davidson: Why bad GDP news this week might actually be good for homeowners
18.
LoanMarket: Major banks embrace low-deposit buyers
20. Our Awards & Accolades
22.
Ray White Sandringham & Mount Roskill team
Chaos Reigns - Or Does It?
OCR steady, First Home Buyers Grant gone, brightline test back to square one, investor interest deductibility reinstated, debt to income ratios start 1 July, LVR’s, job losses, the Budget, the cost of living, not to mention protest marches...
From The New Zealand Herald on May 22: “The Reserve Bank has held the Official Cash Rate (OCR) unchanged at 5.5%, saying inflation is falling and should be back on track by the end of 2024.”
From One Roof Property on June 4: “Last week the Reserve Bank announced debt-toincome (DTI) ratio restrictions would take effect from July 1. The details of the new rules had already been flagged earlier in the year: 80% of bank lending will now be governed by a set multiple of the applicant’s pre-tax income. For owner-occupiers, it’s a multiple of six, and for investors, it’s a multiple of seven, although the rules won’t apply to new-builds or non-bank lenders.”
Director of City Realty Group, Daniel Horrobin comments: “Despite all of the above, the property market in general and the central city apartment market in particular, remain remarkably healthy.”
Michelle Moffitt from Realestate.co.nz reports: “In April, we saw total traffic continuing to track up, increasing 13.9% year on year. The number of property seekers on our app, our most engaged audience, also increased – up 16.23% compared to last year.”
Daniel says: “Our Ray White corporate office reports activity across the country, including listings, up 20-30% on this time last year.”
“The number of TradeMe listed properties for sale in Auckland’s Central City Apartment space continues to trend up and now hover around or above the 650 mark. This is evidence that sellers generally believe that they can achieve a result in the current market,” adds Daniel.
“A statistic that may surprise and demonstrates engagement also from property buyers, is that across the month of May 2024, our team welcomed 334 buyers through our open homes, up a whopping 40% on the previous month, April,” declares Daniel.
“Our auction numbers, although not keeping pace with numbers earlier in the year, remain steady.” Daniel adds: “Auction provides a compelling point of difference in a market where buyers are spoilt for choice. In fact another interesting statistic arising from our open home monitoring, is that half of all open home attendees in May, were visiting properties being sold by auction.”
In the property management/rental world Daniel reports some exciting news. “Our partner, SuperCity Property Management, not only moved into brand new Eden Terrace premises this past month but was awarded Fastest Business Growth for the last quarter by Ray White NZ. This is an award they and we are extremely proud of and a wonderful note on which to finish the month.”
“A statistic that may surprise & demonstrates engagement is that across the month of May, our team welcomed 334 buyers through our
open homes, up a whopping 40% on the previous month, April,”
Tony Alexander: The return of the housing market slump - who’s to blame?
Buyers are in retreat and the market won’t pick up again until interest rates come down.
ANALYSIS: New Zealand house prices rose on average by 0.9% per month between July and November 2023, according to the Real Estate Institute of New Zealand’s house price index. Since then, prices have fallen on average by 0.3% per month, and all the housing-related indicators I gather from my monthly surveys point to continuing deterioration in the residential real estate market.
Most recently, my Spending Plans Survey showed a net 10% of respondents were delaying or halting plans to buy a house.
This is the second weakest result on record and compares with a net 4% stepping back from the market at the start of the year.
Not surprisingly, real estate agents are noticing a drop in first-home buyer activity. The proportion of agents who have seen more first-home buyers planning to make a purchase has fallen from a net 55% positive at the start of the year to a 16-month low of just 5% at the end of May.
Young buyers are pulling back and I feel this is due to increasing insecurity in the
Houses in Wellington. The Reserve Bank has stated it is keeping interest rates higher for longer to combat inflation.
Photo / Fiona Goodall
job market, especially among those who have not seen a weak labour market before. Or, if they have, the Reserve Bank and government were stepping in to boost things for them. But no one is there to help this time around and forecasts that the unemployment rate will soon rise from 4.3% to above 5% are scaring people away from the biggest financial decision of their lives so far.
But it is not just young buyers who are stepping back. Investors, too, have retreated further into the hills they have been hiding in since the end of March 2021.
A net 19% of respondents to my Spending Plans Survey said they were shelving thoughts of buying an investment property, up from a net 9% at the start of the year.
And a net 25% of real estate agents are now saying they are seeing fewer investors looking to make a housing purchase, in contrast to the net 22% of agents at the
start of the year who said they were seeing more investor buyers.
The real estate market has cooled since the surge in sales and prices around the middle of last year. Job worries have grown, a new flood of vendors hit the market in the New Year, and the overall outlook for the economy has deteriorated amidst new unavoidable cost of living surges, including higher council rates and insurance premiums.
When do I think things will improve?
Not until interest rates fall away. When might that happen? Late this year, when the Reserve Bank acknowledges that its monetary policy settings are now too tight (a reversal of 2021-2022 when they were much too loose). If you’re losing your business or job this year, the chances are it’s because of the central bank’s misreading of the economy in 2021 in particular. Or you’re a public servant affected by the inevitable consequences of the debt blowout from 2017-23.
- Tony Alexander is an independent economics commentator. Additional commentary from him can be found at www.tonyalexander.nz
Total Sales
May 2024
18
May 2023
There was a -10% decrease in the total number of sales year on year.
Total Sales Value Median Sales Price Median Days On Market
May 2024
$27,377,000
May 2023
May 2024
May 2023
20 $25,406,500 $1,250,000 49.5
There was a 8% increase in the total sales value year on year.
Source: REINZ
There was a 34% increase in the total median sale price year on year.
May 2024
$1,672,500 35.5
May 2023
There was a -28% decrease in the total median DOM year on year.
Sandringham Recent Sales.
Mount Roskill Market Statistics.
Total Sales
May 2024
18
May 2023
There was a -10% increase in the total number of sales year on year.
Total Sales Value
May 2024
$23,882,055
May 2023
May 2024
$1,190,000
May 2023
20 $27,756,000 $972,500
There was a -14% decrease in the total sales value year on year.
Source: REINZ
There was a 22% increase in the total median sale price year on year.
Median Sales Price Median Days On Market
May 2024
45
May 2023
61
There was a -26% decrease in the total median DOM year on year.
Mount Roskill Recent Sales.
City Realty Group Auction Update
As winter takes hold, City Realty Group has observed a tightening across all price points at our auctions. This seasonal shift has led to a decrease in the immediate auction clearance rates under the hammer.
However, when considering post-auction negotiations, our overall clearance rates have remained robust, consistently staying above 50%. The average time a property stays on the market has also been steady, currently at 36 days.
One notable benefit of our auction process is the ability to identify and engage with genuinely interested parties, even if a property does not sell immediately under the hammer. This strategic advantage allows us to negotiate effectively post-auction, ensuring that a significant portion of properties still find their new owners shortly after the auction concludes.
In stark contrast, non-auction properties are experiencing much lower clearance rates, hovering around 10%. This significant disparity underscores the efficacy of the auction process in all market conditions. The auction method not only attracts serious buyers but also fosters a competitive environment that can lead to more favorable outcomes for sellers.
The current market dynamics highlight the importance of adaptability and the strategic use of auctions in real estate. Despite the initial tightening of auction clearance rates, the ability to convert interest into sales postauction demonstrates the resilience and effectiveness of this approach.
City Realty Group remains committed to leveraging these insights to maximize value for our clients, ensuring that we continue to navigate the complexities of the market with confidence and success.
“One notable benefit of our auction process is the ability to identify and engage with genuinely interested parties,”
Kelvin Davidson: Why bad GDP news this week might actually be good for homeowners
The five things you need to know about the housing market this week.
1. A tight call on GDP
The data highlight this week will be Thursday’s release of the GDP figures for Q1 from Stats NZ. As always, the data is a bit ‘old’ by the time it’s released, but even so, there’ll be a lot of headlines. My hunch is GDP has grown by about 0.2%, but other economics experts are picking a small decline. It’s a close call, and a rise in GDP would rightly be applauded. But it could also be argued that a drop would be better for the housing market, in that it might tame inflation even more quickly and bring forward interest rate cuts.
2. Fixing short but at a cost
For some, rate cuts can‘t come soon enough. Reserve Bank data released last week showed that 58% of new loans in April (by value) were fixed for a year or
less. That‘s an increase from 57% in March, 56% in February, and well up from 36% in December. Given that the next significant moves in the Official Cash Rate and bank mortgage rates are likely to be down, it makes sense to go for a shorter fixed rate. But the problem is that those interest rate falls might be six to nine months away at least, and short-term rates are higher than longer ones.3. Rental growth and migration both past their peak?
3. Suburb-level data continues to show a patchy market
Last week CoreLogic published its threemonthly review of median property values across almost 940 suburbs, and it was a mixed bag. Around 220 areas had fallen by at least 1% since March, with areas such as Takapuna and Mataura (at opposite ends of the value spectrum) seeing fairly chunky
Mortgage-holders have been feeling the pinch of higher-for-longer interest rates. Photo / Getty Images
drops of more than 5%. But a fair number of suburbs have also increased by similar amounts since March, so it’s pretty clear that “patchiness” remains a useful word at present. It’s probably still too early to conclude that a fresh downturn has arrived, but certainly, a lot of the momentum in house prices has petered out in recent months, reflecting high mortgage rates and plenty of choice for buyers (at least those that can get/afford the finance).
4. Migration has passed the peak
The latest Stats NZ figures showed a net migration total for the 12 months to April of 98,464 – still quite high (the average is 30-35,000), but well down from October’s peak of nearly 138,000. Clearly, migration is still boosting housing demand across NZ, but not as much was it was at the end of last year, and this slowdown is coinciding with rents also flattening out too. One really interesting (concerning) aspect of the migration data at present is that NZ
citizens are departing in record numbers, whether you look at that in gross or net terms. These periods of ‘brain drain’ tend to impact the provinces more than the main centres, and could be problematic for regional economies in terms of maintaining their population bases of younger people.
5. Rental growth continues to slow
The Stats NZ flow measure of rent prices was only up by 3.8% in the year to May, the first time growth has been below 4% since June last year, and it’s also getting closer to the long-term average (3.3%).
That’s not ideal news for investors, but certainly very welcome for tenants, and also an encouraging trend in terms of the wider slowdown for general inflation. Part of the slowdown has probably been less wage growth (limiting how much tenants can actually afford), but it’ll also be reflecting slightly softer demand and also a rising supply of available rental listings.
CoreLogic chief economist Kelvin Davidson: “Greater access to larger dwellings and at lower prices is just another aspect of the wider success story that has been the first-home buyer segment of late.” Photo / Peter Meecham
Property Management Update
We’ve now passed the shortest day and are heading back to summer!
Hang in there!
Part of the Supercity Property Management service is to provide tenants with relevant information on how best to care for the property. For example here is the info we provide to fight the good fight against mould!
Handy tips for dealing with mould.
Three conditions have to be present for the growth of mould:
• Mould spores
• A surface with sufficient foodstuff to maintain life
• A source of moisture
Mould spores are present everywhere in the air around us, and there is nearly always a food source available; for example, cooking fumes or even dust can be sufficient. Per day, an average household generates large amounts of moisture from normal activities. For example: cooking 3 litres, dishes 1 litre, showers/bath 1.5 litres, washing clothes 0.5 litres and drying clothes 5 litres. Add to this up to 4 litres per person, per day, from breathing and perspiration.
Heating with gas or kerosene heaters also produces a lot of moisture: 1 litre of kerosene produces 1 litre of moisture and a 2kW gas heater produces 1 litre of moisture every 1.5 hours.
Manager +64 21 193 3962 kurt.smith@raywhite.com
Prevention
To prevent moisture build-up, there needs to be adequate heating and ventilation. The interior temperature should ideally be maintained at 18°C to 22°C. Creating air movement will keep the relative humidity at a manageable level. This ventilation can be achieved by leaving windows open a centimetre or two. It’s better to ventilate little and often, rather than in short vigorous bursts.
Window glass is a good guide; if it starts to show more than a minimum of condensation, the windows should be opened a little further. Remember you’ll still need to ventilate your home in the winter months, even though you may think the house needs to be sealed to prevent heat escaping.
Controlling and reducing household mould growth
Areas of the house prone to mould are those with:
• Condensation or high humidity, such as the kitchen, bathroom and laundry
• Restricted ventilation, such as in corners and cupboards
• Reduced dry heat. For example, in winter, if the inside temperature is lower than the outside temperature
• Ineffective insulation in walls and ceilings
Steps to reduce mould and growth heating
Condensation and mould growth can be reduced by providing a continuous low level of dry heat. Continuous, even heating will allow warmth to penetrate the walls and ceilings. On cool days, try to keep the inside temperature at least 5°C higher than the outside temperature. Keep windows and walls dry by:
• Ventilating rooms by opening windows or doors, or by using extractor fans
• Wiping away condensation
• Heating rooms with dry heat
Family room / lounge
Reduce air moisture by:
• Opening curtains and blinds during the day
• Opening windows and doors when possible
Kitchen
• Reduce moisture and humidity levels by:
• Using an exhaust fan or opening a window when cooking
• Using lids on pots and saucepans
• Checking plumbing for leaks
Bathroom
• Open a window or door, or use an exhaust fan when having a bath or shower
• Clean and dry surfaces that regularly get wet
Laundry
Reduce air moisture by:
• Hanging wet clothes outdoors
• Opening a window when using the drier or venting the drier outside
• Opening a window or door when using hot water
Cupboards and bedrooms
• Open curtains to warm rooms with sunlight
• Ensure clothes and shoes are dry before putting them away
• Keep bedrooms and cupboards uncluttered and well ventilated
• Do not press beds hard against bedroom walls – keep a gap for air circulation
Storage space
Dispose of any wet, badly damaged or musty smelling items
Store dry items in sealed plastic containers
Maintain good air movement in storage areas
Removing mould
Mould should be removed as soon as it appears. Small areas of mould can be cleaned by using a bleach mixture (1 part bleach to 3 parts water) or a suitable commercial product such as Exit Mould. Make sure to follow the manufacturer’s instructions, wear rubber gloves and keep the area well ventilated. Take care not to splash the cleaning solution on yourself or other surfaces. Do not dry brush the mould, as a brush can flick mould spores into the air, which may cause health problems.
027 742 5227
jamie.maclennan@loanmarket.co.nz
Major banks embrace lowdeposit buyers
Exciting developments are on the horizon for sellers as more major banks embrace low-deposit buyers, expanding market access alongside the new changes from the Reserve Bank coming in 1st of July for low deposit lenders.
Saving for a deposit can be challenging, so this shift promises to empower more prospective buyers.
Up until recently most of the mainstream banks haven’t been offering pre-approvals and only considering applications which accompanied a signed sale and purchase contract when a client had less than
20% deposit. This is now starting to change with some lenders now offering pre-approvals with a little as 10% deposit and in one case 5% deposit, which is great news for buyers especially with signs indicating we may be nearing the peak of the interest rate cycle.
There’s hope that buyers will feel reassured about stable & decreasing rates, fostering confidence in entering the market.
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.
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?
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.
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.
+64 (9) 281 4707
www.rwsandringham.co.nz
+64 (9) 308 5551
www.rwmtroskill.co.nz
Leaders in the Auckland Residential market.
Ray White Sandringham
Ray White Mount Roskill
Meet the team.
Daniel Horrobin
SALES TEAM - SANDRINGHAM OFFICE
Pauline Bridgman
Amy Tsai
Kate Jiang
Tania Greer
Tracey Potter
Tim Cai
Diane Goer
Emily Hu
Ivan Koulin
Yuhei Umezaki
Hugh Free
Daniel Chen
Lauren Indrisie
Alastair Hubbard
Susan Woods -Markwick
Rosa Solano
SALES TEAM - MOUNT ROSKILL OFFICE
OUR LOANMARKET MORTGAGE ADVISORS
WE CAN NEGOTIATE A LOWER RATE. WORK WITH A QUALIFIED AND COMPETENT MORTGAGE ADVISER
Mortgage Adviser
Damon Pooley Ethan Li
Jacky Mao
Jon Clark Justine Chen Lisa Hui
Mark Li
Nana Li
May Ma
Eva Yin
Benjamin Liu
Pantea Wilson
Sara Wang Tony Liu
Grant Harvey
Shubhrta Khanna
Ross Harvey
Maggie Liu
Anna Dong
LoanMarket Mortgage Adviser
Jo Price
Davy Chen
Evie Gao
LoanMarket
Jamie Maclennan
