Auckland Apartment Report - May

AUCKLAND: APARTMENT REPORT

M AY 2 0 2 2 | P R O P E R T Y R E P O R T

The group with the family factor 1

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CONTENTS:

RAY WHITE CITY APARTMENTS Market Comment Auckland Central Statistics Article – How to survive the looming interest rate hikes April Sales Article – Ashley Church: Have we seen the last of NZ’s big house price jumps?

Why Choose Us? Marketing Your Home Meet the Team

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MARKET COMMENT

RAY WHITE CITY APARTMENTS’ 87% MAY AUCTION SUCCESS RATE. Ray White City Apartments has achieved a fantastic 87 percent auction success rate over the last four weeks, providing evidence that this particular segment doesn’t automatically mirror wider market trends.

In April the Real Estate Institute of New Zealand (REINZ) commented that auction clearance rates across the country had eased.

Yet Ray White City Apartments has achieved this 87% auction clearance rate over the last four weeks and an 80% auction clearance rate over the last three weeks.

Director of the Ray White City Realty Group, Daniel Horrobin, says this level of auction success is out of step with the rest of the market, but Ray White City Apartments have the structure and strategies to drive competition amongst auction buyers.

investors and traders who may hold apartments until the next opportunity comes along.

Borders opening up and the announcement that all international students can enrol to study in New Zealand from July 31 have increased confidence in the market.

It’s anticipated the first home buyer category will become even more active after the May Budget announcement that House price caps for First Home Grants increased in many parts of the country. First Home Grants enable eligible first home buyers to obtain a grant to top up their deposit of up to $5,000 for an existing home or up to $10,000 for a new build.

The Budget increased this grant’s house price cap in Auckland from $700,000 to $875,000 for new or existing properties. This higher price cap, which “Auctions remain a stand-out method of sale for was effective immediately, means even more Ray White City Apartments.”

Auckland city apartments will be on the radar of first home buyers.

Increased confidence in the apartment market is also reflected by Ray White City Apartments Those wanting to get onto the property ladder having had a 19% increase in total sales and a 63% in Auckland are increasingly realising that Central increase in new listings in May, as compared to the Auckland apartments are a way in, given traditional previous month of April 2022. houses’ higher prices.

This has been helped by the fact that all categories of buyers have returned to this apartment market.

These include first home buyers, downsizers,

For more information or advice about your property needs, please contact one of our team members at Ray White City Apartments.

DA NI E L H O R RO B IN City Realty Group Director 021 595 976 | daniel.horrobin@raywhite.com 5

HOW TO S URVIVE THE LOOMING INTEREST RATE HIKES Rupert Gough

ANALYSIS: Not since its inception in 1999 has the Official Cash Rate (OCR) in New Zealand increased by 50 basis points in two consecutive announcements. As of May 25 2022, that record has now been broken with more

28 May 2022

hikes - potentially even 50 basis point hikes possible later this year. The question on every homeowner’s lips (or keyboard), therefore, is likely to be: how will this affect my mortgage or a mortgage I intend to get?

OFFICIAL CASH RATE: FALL AND RISE The chart shows the movement in the Official Cash Rate between September 2014 and May 25, 2022, when the Reserve Bank increased the rate by 0.5 percentage points to 2%.

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The good news is that the majority of the interest rate pain is already baked in.

Economists are forecasting two-year interest rates to be stretching towards 6% by end of 2022 and, given they are already hovering around 5%, that doesn’t represent as big a change as it does to those rolling off those ~2.2% interest rates from last year. A 0.5% increase in interest rates means ~$10 extra per week per $100k of borrowing.

In other words, mortgage interest rates are much higher now but the forecast isn’t for things to get significantly worse; having already gone up 3% in the past year, no one is picking another 3% this year. The best thing homeowners can do now is to tighten their belts (ie; stop spending, which is exactly what the Reserve Bank is trying to achieve) and focus on how they can pay their current higher interest rates.

For those looking to purchase, the announcement from the Reserve Bank should have been a little bit of good news too. It didn’t largely change its forecast for the OCR - a forecast which, as mentioned above, is already baked into interest rates. There has been a lot of hesitancy in the market for buyers concerned about interest rates continuing their skyward trend and holding off purchasing as a result.

Based on the Reserve Bank’s announcement, it seems likely that interest rates will max out around 6%-7% over the next couple of years.

Quick-acting homebuyers who can stomach that level of home-loan rate may find some bargains out there at the moment if they jump in before the buyers return.

With the Official Cash Rate increasing, variable

rates will inevitably increase quite quickly however unlike in the 2011-2013 era, when large portions of mortgages were on a floating rate, most mortgages are currently fixed. The statistic appears to be that around 19% of home loans are on a variable rate, having dropped by around 3% recently however this may be skewed by the ASB’s recent Back My Build and ANZ’s current Blueprint to Build schemes which offer(ed) incredibly discounted variable rates for buyers of new build properties.

It’s worth taking the time, if you do have a revolving credit, floating, or offset account as part of your mortgage, checking that the bank is applying a discount to that loan is a good use of time. Most mortgages under 80% LVR qualify for a significant discount (often 0.6% to 0.8%) from the advertised variable rate which can end up saving hundreds or even a few thousand dollars per year.

Rising interest rates are the original Reserve Bank tool to heat and cool the economy. In past years it has been more about cooling the property market but with Loan to Value Ratios and threats of Debt to Income ratios more commonly used to do this, the OCR is now more of a tool for inflation adjustments.

However, the increased cost of mortgages is what stops people from spending and reduces inflation. Start belt-tightening now, try to get your mortgage payments up to where they will be at 6%-7% and you will be able to weather the next few years.

- Rupert Gough is the founder and CEO of Mortgage Lab and author of The Successful First Home Buyer.

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AUCKLAND CENTRAL

MARKET STATISTICS

T O TA L S A L E S

MEDIAN SALES PRICE

April 2022

April 2022

April 2021

April 2021

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

There was a 27.4% decrease in the total median sale price year on year.

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$385,000 $530,000

T O TA L S A L E S VA L U E

M E D I A N D AY S ON MARKET

April 2022

April 2022

April 2021

April 2021

There was a 58% decrease in the total sales volume year on year.

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

$30,460,000 $73,381,000

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APRIL SALES – AUCKLAND CEN Address

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Bedrooms

Sale Date

Sale Price

807/57 Wakefield Street

1

01-May-22

$380,000

212/145 Nelson Street

2

03-May-22

$913,000

10J/189 Hobson Street

2

03-May-22

$280,000

1606/10 Waterloo Quadrant

2

03-May-22

$520,000

1420/10 Waterloo Quadrant

1

03-May-22

$240,000

101/36 Eden Crescent

2

03-May-22

$484,000

4A/23 Emily Place

1

04-May-22

$477,000

1106/47 Beach Road

1

04-May-22

$455,000

420/149 Nelson Street

2

09-May-22

$517,500

622/149 Nelson Street

2

09-May-22

$590,000

116/145 Nelson Street

1

10-May-22

$526,000

608/85 Customs Street West

2

10-May-22

$400,000

1208/8 Mount Street

5

10-May-22

$677,000

1505/70 Anzac Avenue

1

10-May-22

$425,000

118/133 Beach Road

1

10-May-22

$48,000

225/430 Queen Street

2

11-May-22

$340,000

14B/32 Eden Crescent

1

11-May-22

$422,500

607/72 Nelson Street

2

12-May-22

$222,000

1405/8 Airedale Street

2

12-May-22

$675,000

413/10 Ronayne Street

2

12-May-22

$143,000

204/11 Union Street

1

13-May-22

$210,000

3H/16 Market Place

1

13-May-22

$210,000

1007/18 Beach Road

1

13-May-22

$75,000

5C/22 Beresford Square

1

15-May-22

$465,800

6E/36 Day Street

1

16-May-22

$320,000

2D/11 Pakenham Street East

2

17-May-22

$256,000

302/43 Anzac Avenue

5

17-May-22

$600,000

1408/18 Beach Road

3

17-May-22

$216,000

NTRAL Bedrooms

Sale Date

Sale Price

404/8 Airedale Street

1

18-May-22

$410,000

805/18 Beach Road

2

18-May-22

$138,000

314/57 Mahuhu Crescent

2

18-May-22

$240,000

5D/135 Victoria Street West

1

19-May-22

$105,500

12C/2 White Street

1

19-May-22

$90,000

7M/16 Gore Street

1

19-May-22

$50,000

1005/22 Nelson Street

1

20-May-22

$385,000

2306/10 Commerce Street

1

20-May-22

$968,000

312/57 Mahuhu Crescent

2

20-May-22

$270,000

106/47 Union Street

2

21-May-22

$1,175,000

12/36 Sale Street

1

23-May-22

$1,125,000

3/88 Cook Street

2

23-May-22

$640,000

1106/10 Commerce Street

2

23-May-22

$1,058,888

6A/125A Hobson Street

1

24-May-22

$265,000

9L/14 Waterloo Quadrant

1

24-May-22

$146,000

212/145 Nelson Street

2

25-May-22

$913,000

406/155 Beaumont Street

2

26-May-22

$2,035,000

1001/100 Greys Avenue

1

26-May-22

$527,000

905/22 Nelson Street

1

26-May-22

$373,000

9E/25 Rutland Street

1

26-May-22

$75,000

1009/22 Nelson Street

1

27-May-22

$380,000

502/47 Hobson Street

1

27-May-22

$345,000

312/83 Halsey Street

3

30-May-22

$1,600,000

206/421 Queen Street

3

30-May-22

$400,000

3EU + 3EV/23 Hobson Street

-

30-May-22

$156,000

3002/10 Commerce Street

3

30-May-22

$2,700,000

603/41 Beach Road

1

30-May-22

$760,000

13/145 Quay Street

1

31-May-22

$155,000

Address

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APRIL SALES – AUCKLAND CEN Address

Bedrooms

Sale Date

Sale Price

1E/5 Parliament Street

1

31-May-22

690000

724/8 Dockside Lane

2

31-May-22

135000

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

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NTRAL

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A S H L EY CHURCH: HAVE WE S E E N TH E LATEST OF NZ’S B I G H O US E PRICE J UMPS? Ashley Church

COMMENT: I’m always extremely uncomfortable at being introduced as a “property expert” and prefer to be described as a “property commentator” – a term which more accurately reflects that my views are simply opinions. That’s important because, as much as some of us have been observing the market for a long time, we’re all always at risk at being influenced by our own beliefs and worldview and allowing these to colour our judgement.

In my own case, while I’m proud of the high degree of accuracy of my annual predictions going back many years – I’m also conscious that, occasionally, the views expressed in some of my regular columns turn out to be wrong. For example, in an article I wrote back in October 2020 I made the argument that, while mortgage interest rates would eventually increase from their historically low levels, they would take a long time to do so and that we would have plenty of warning. As predicted, they’re now starting to rise, but at a much more rapid rate than I suggested. As a result they’ve impacted on market confidence which, to a large degree, is why we’re seeing the current uncertainty in the property market.

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03 June 2022

But as much as I’m cautious about predictions of where the market will go in the future, I’m much more bullish about the views I express regarding what the market has done in the past. Why? Because historical market behaviour provides a rich reservoir of data and knowledge from which we can learn and, while past market performance doesn’t guarantee future performance, it can absolutely provide a valuable guide from which we can draw useful parallels.

All of which is why I was surprised to see a recent article on OneRoof in which readers were advised not to count on prices doubling again over the next 10 years.

The commentator was referring to a wellknown view, among Kiwi property stalwarts, that New Zealand house prices broadly double every 10 years. It’s a view I happen to agree with – albeit with some pretty strong caveats.

Firstly, it’s not an exact science. While some parts of New Zealand have, indeed, doubled every decade since the 1980s – others have increased in value much more quickly, while others have grown in value at a slower pace – so the observation is a generalisation.

Ashley Church: “Historical market behaviour provides a rich reservoir of data and knowledge from which we can learn.”

Photo / Ted Baghurst

But general or not, the trend is real. House prices in New Zealand have, indeed, increased strongly since the 1980s despite the economic conditions underlying those increases having almost nothing in common over those decades.

In contrast to the suggestion, in the recent article, that house prices rose due to a unique set of circumstances – the opposite is true.

The doubling of house prices in the 1980s happened during a time of very high inflation and mortgage interest rates (both were over 20%) and high outward migration – whereas the economic environment in which they doubled, in the 90s, was much more benign with inflation down to 4% and mortgage interest rates down to around 12%.

So will this trend continue? Will house prices continue to rise strongly in the future or have we seen our last doubling?

By the time we hit the 21st century interest rates had dropped even further and the immigration outflow was starting to turn into an inflow – and, of course, over the last ten years, inflation has been extremely low, mortgage interest rates have dropped to historically low levels, and inward migration has turned into a torrent.

Yet, despite these very different conditions, house prices have continued to broadly double every seven to ten years – a fact which was overlooked in the article because it only focused on the period since the early 2000s.

If I’m right, the regional markets will stay flat for another two to three years – but the Auckland market will show signs of life, again, well before that.

No one knows for sure. Certainly, if steadily reducing mortgage interest rates have been the main driver of house price growth over the past 40 years (a view I agree with) then the current OCR rises, by the Reserve Bank, will act as an inhibitor of house price growth for a while. But we’ve seen spikes in mortgage interest rates before and we know that these didn’t hold back house price growth – so I’m still of the view that what we’re experiencing right now is a reaction to specific events rather than a fundamental realignment of the market.

Only time will tell.

- Ashley Church is a property commentator for OneRoof.co.nz. Email him at ashley@nzemail.com

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RAY WHITE CITY APARTMENTS

WHY CHOOSE US?

WE’RE ON THE UP-AND-UP. Based in the heart of Auckland City, Ray White City Apartments 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 apartment market continues to experience unprecedented growth, City Apartments & Wynyard Quarter is well positioned to maintain its leadership in the market.

City Realty has a strategic partnership with Loan Market, 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, Loan Market 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.

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MARKETING YOUR HOME 18 12

A COMPREHENSIVE M A R K E T I N G S T R AT E G Y TO REACH ACTIVE & PA S S I V E B U Y E R S 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 multichannel digital strategy and print media.

PROPERTY PORTALS P R I M A R I LY A C T I V E & S O M E PA 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 A C 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 PA 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 criteria-based 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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MEET THE TEAM

CITY A PA RT M EN TS M A N AGEM E NT

Daniel Horrobin Director of City Realty Group

General Manager for City Realty Group

Cameron Brain Auction Manager for City Realty Group

CITY A PA RT M EN TS SA L ES P EO PLE

Ady Huang

Aileen Wu

Casey Chen

Chris Cairns

Licensee Salesperson

Licensee Salesperson

Licensee Salesperson

Licensee Salesperson

Chris Guilford

Craig Warburton

David Lee

Dene O’Kane

Licensee Salesperson

Dominic Worthington

Licensee Salesperson

Dusan Valenta

Licensee Salesperson

Elena Mackor

Licensee Salesperson

Licensee Salesperson

Licensee Salesperson

Habeeb Urrahman

Hunter Freeman

Jean Ooi

Licensee Salesperson

John Min

Licensee Salesperson 20

Vikas Verma

Licensee Salesperson

Judi Yurak

Licensee Salesperson

Licensee Salesperson

Gillian Gibson

Licensee Salesperson

Jeong Lee

Licensee Salesperson

Licensee Salesperson

Justin Choi

Katie Read

Licensee Salesperson

Licensee Salesperson

Keisha Gutierrez

Licensee Salesperson

Marco Sahar

Licensee Salesperson

Nick Armstrong

Licensee Salesperson

Krister Samuel

Licensee Salesperson

Mark Li

Licensee Salesperson

Ryan Bridgman

Licensee Salesperson

Santana Munns

Sapphire Munns

Steve King

Steve Kirk

Licensee Salesperson

Licensee Salesperson

Licensee Salesperson

Leo Zhu

Licensee Salesperson

May Ma

Licensee Salesperson

Rickus Moll

Licensee Salesperson

Sean Ma

Lisa Zhang

Licensee Salesperson

Michelle Yurak

Licensee Salesperson

Sam Huang

Licensee Salesperson

Siming Zhou

Licensee Salesperson

Licensee Salesperson

Victor Liu

Warren Thomas

Licensee Salesperson

Licensee Salesperson

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