Ray White Residential Market Report - May 2024

Residential Market Report.

04. Market CommentInflation slowing but proving a Stubborn Beast.

08.

Sandringham Sales Statistics April 2024

12.

Auction Update with Cameron Brain

16. Property Management Market Comment

20. Marketing your property

06.

Article – Tony Alexander: When homeowners should expect the magic 1% cut in mortgage rates

10.

Mount Roskill Sales Statistics April 2024

14.

Article – Kelvin Davidson: Firsthome buyers getting more bang for their buck right now

18.

LoanMarket: Doors Opening for Low-Deposit Buyers.

22. Ray White Sandringham & Mount Roskill team

Inflation slowing but proving a Stubborn Beast.

REINZ CEO Jen Baird said about recent inflation levels: “Inflation came in at 4%. Which is good in the fact it is down from 4.7%. At its highest point, it was 7.3% back in June 2022. So the fact that it is trending this way – is a good thing”.

Baird goes on to say about March statistics: “Listings increased substantially, up by 23.9% nationally compared with March 2023, reinforcing a trend we have seen since the beginning of 2024 with more property coming to market. New Zealand’s stock levels also saw a year-on-year increase, which means more available properties for sale and more choices for buyers. Agents are seeing activity among a range of buyer groups, with first-home buyers and owner occupiers being the most active.”

Director of City Realty Group, Daniel Horrobin says “This is reflected in our Auckland Central apartment market with TradeMe reported properties for sale now comfortably into the 600’s after dipping below 500 in December last year”.

The Reserve Bank has reported: “More people are struggling to make their mortgage repayments. A predicted increase in unemployment is expected to make matters worse.”

Daniel reports a steady month for sales in April with auctions still a favoured method for those genuinely wanting a timely result.

“We were delighted to finish April on a high note with all four properties auctioned on the 24th selling under the hammer,” he says.

“However in the property management sector there has been extremely disappointing news,” reports Daniel.

Renters and realtors generally are upset with

a government decision to scrap a bill meant to regulate property managers. They say the current state of the property management sector lacks any minimum standards or basic checks and balances to protect tenants and landlords. The bill would have established a regulatory regime for property managers, including minimum entry requirements, professional standards of practice, and a complaints and disciplinary process.

Real Estate Institute chief executive Jen Baird said the industry was “extremely disappointed” with the decision to scrap the bill. “In an industry where a modest one-person property management business can oversee assets totalling $60 million in retirement savings, it is inconceivable that such a significant sector remains unregulated,” Baird said.

“No other profession handling assets of this magnitude operates without oversight in New Zealand.”

Daniels says: “On the ground in the central city, rental activity remains steady with net immigration gains also still healthy but activity is certainly not what it was at the start of this year. We aren’t seeing the same numbers turn up to viewings and rents generally have flattened somewhat.”

“On a finishing note,” says Daniel, “back on a sales theme, we have been tracking our open home visitor numbers for some time now. We’re pleased to report that our team welcomed 239 buyers through our central open homes during April alone which is really encouraging.”

“We’re pleased to report that our team welcomed 239 buyers through our central open homes during April alone which is really encouraging.”

Tony Alexander: When homeowners should expect the magic 1% cut in mortgage rates

Winter is coming and the economic outlook is grim.

ANALYSIS: It doesn’t look like this winter is going to be a particularly good one for many people and for the economy overall. My latest monthly Spending Plans Survey has this week recorded a deterioration in the proportion of the 555 respondents expecting to buy more stuff in the next 3-6 months to a net 36% negative.

That is, 36% more of the respondents plan to cut their spending than plan to increase it. This is a deterioration from -30% at the start of April and -13% in December. The average reading for the four years I’ve been running this survey is -4% so looking at

these latest numbers one would have to say prospects for the retail sector are fairly bad.

In fact, a net 16% of people plan spending less on motor vehicles, a net 44% plan cutting spending on eating out, and a net 27% plan buying fewer household appliances and items of furniture. The only two areas where we plan spending more are groceries – logically because they cost more – and international travel.

A net 4% of us still plan going overseas despite feeling very depressed about the economy and our jobs. Such is what happens after a pandemic when we could

Kiwis have cut back on spending as job fears mount. This has had an impact on house price growth. Artwork / Beth Walsh

not travel offshore for a couple of years. We are still engaging in revenge travel.

Regarding jobs I can get some good insight from the monthly survey of real estate agents which I run with NZHL. I ask agents a variety of questions including what they are seeing buyers express greatest concerns about. On average, since early 2020, 16% of agents have said that buyers are worried about their income.

In January that reading was 14%. Now it is a record 50%. This neatly and clearly shows us the key thing which has changed in our economy since the start of the year – employment confidence and job security. People are fearful of losing their jobs or not securing a new one. It will be interesting to see in the coming year how this affects employee demands to work from home and tolerance of employer requests to get back in the office.

The new high level of concern about job loss helps explain why a net 37% of agents have just reported in the survey that they are seeing reduced numbers of people attending open homes. In January a net 57% said they were seeing more people. The turnaround is quite stark, and it is perhaps no surprise that FOMO – fear of

missing out – is now almost completely gone.

Only 3% of agents now say that they can see buyers expressing concern about missing out on a property. This proportion in January was 23% and in September 40%. In contrast the proportion of agents saying buyers are worried about a lack of listings has fallen to a record low of 4% from 25% in January and 55% in September. Buyers have plenty of properties to choose from.

The upturn in New Zealand’s residential real estate market which occurred in the middle of last year plateaued late in the year and now things are going slightly in reverse. When will they improve again? Not until interest rates fall. When might mortgage rates fall by enough (1%) to cause renewed upward movement?

I’d say by the end of the March quarter next year. When that happens focus is likely to turn to the rapid decline in house building despite strong population growth and rules less negatively impacting investors. But between now and then things are going to look very weak across housing and many other sectors in the economy. As the now common mantra in the business sector goes – “survive to ‘25”.

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

Total Sales

April 2024

12

April 2023

13

There was a -7% decrease in the total number of sales year on year.

Total Sales Value Median Sales Price Median Days On Market

April 2024

$16,059,500

April 2023

April 2024

$1,337,250

April 2023

$15,843,500 $1,250,000

There was a 1.3% increase in the total sales value year on year.

Source: REINZ

There was a 6.98% increase in the total median sale price year on year.

April 2024

45

April 2023

49

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

Sandringham Recent Sales.

Mount Roskill Market Statistics.

Total Sales

April 2024

26

April 2023

12

There was a 116% increase in the total number of sales year on year.

April 2024

April 2023

Total Sales Value

April 2024

$30,830,800

April 2023

$15,479,500

There was a 99% increase in the total sales value year on year.

Source: REINZ

Median Sales Price Median Days On Market

$1,081,750

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

April 2024

$1,115,000 44.5

April 2023

32

There was a 39% increase in the total median DOM year on year.

Mount Roskill Recent Sales.

3 Registered Bidders 68 Number of Bids

City Realty Group Auctions: The Preferred Method in a Tightening Market

As we transition from the warmer months into the cooler seasons, the real estate market has shown signs of firming up. This trend is typical for April and May, as potential buyers and sellers prepare for the seasonal slowdown. However, within this predictable pattern, one method of sale stands out: auctions. The data from City Realty Group Auctions underscores the growing preference for auctions over private treaty sales, highlighting their effectiveness in a tightening market.

April’s statistics paint a telling picture. Despite a nearly 40% decline in open home numbers, properties listed for auction have attracted more buyers compared to those on the market through traditional sales campaigns. This trend suggests a clear preference among serious buyers, who are gravitating towards the transparency and urgency that auctions provide.

City Realty Group’s performance metrics further validate this approach. Our 90-day auction clearance rate stands at approximately 45%, with an average time on the market of just 37 days. In stark contrast, private treaty sales over the same period show a meager 4.2% clearance rate, with properties lingering for an average of 45 days. These figures are not just numbers; they reflect a significant shift in buyer behavior and market dynamics. Auctions are proving to be more efficient in achieving sales, even as the market shows signs of tightening.

Several factors contribute to the success of auctions in the current climate. First, auctions create a sense of urgency among buyers. This urgency can often lead to competitive bidding, driving up the final sale price. Second, the transparency of the auction process provides buyers with the confidence that they are competing fairly.

Additionally, sellers benefit from the auction

process through the concentrated marketing efforts that precede the auction day. These campaigns attract a larger pool of potential buyers, increasing the likelihood of a successful sale. For sellers, the reduced time on market means less uncertainty and a quicker resolution. As we move forward, it is likely that the market will continue to tighten. In this environment, the advantages of auctions become even more pronounced. Sellers looking to maximize their opportunities should consider this method as a strategic approach to navigate the challenges ahead.

City Realty Group remains committed to supporting our clients through these transitions, providing expert guidance and leveraging the strengths of the auction process to achieve optimal outcomes.

In conclusion, as the market adjusts to seasonal and economic pressures, auctions have emerged as a robust and effective method of sale. City Realty Group’s impressive auction clearance rates and shorter days on market highlight the advantages of this approach. For both buyers and sellers, auctions offer a dynamic and transparent platform that aligns well with the current market conditions. As we brace for a tightening market, auctions stand out as the clear choice for achieving timely and successful property sales.

“Our 90-day auction clearance rate stands at approximately 45%, with an average time on the market of just 37 days.”

Kelvin Davidson: First-home buyers getting more bang for their buck right now

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

1. First-home buyers are getting more for less

I recently looked at the state of the firsthome buyer market in New Zealand, analysing market share, the prices being paid and the properties being purchased. The conclusion is this: first-home buyers are getting more bang for their buck at present. Yes, it’s never easy to get that first property, and the median price paid by first-home buyers in Q1 2024 of $695,000 is still a stretch for many people. But it’s down from the $715,000-$720,000 mark 12-18 months ago. Stand-alone houses also now represent almost 75% of first-home buyer purchases, up from 70% in 2023. 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.

2. Borrowers are paying more now to (potentially) save later

The Reserve Bank’s figures for March showed that 57% of new loans (house purchases, bank switches and top-ups) were fixed for up to one year, slightly surpassing the previous record mark of 56% set just a month ago. These short fixes come at a cost, given that the interest rates remain higher than longer mortgage terms of 2-3 years, but the possible benefit is making savings later if and when market rates decline. Nobody has a crystal ball about when and how fast mortgage rates will drop, but I’d just make a simple point about the maths: if a one-year fix is currently 7% and a prevailing two-year rate is 6.5% (for simplicity), you need the one-year rate 12 months down the track to be less than 6% to save money over a full two-year horizon. Food for thought.

Investors and first-home buyers at an Auckland auction. The median price paid by first-home buyers this year is sitting below the $700,000 mark. Photo / Fiona Goodall

3. Rental growth and migration both past their peak?

Today we’ll get Stats NZ’s rent price measure for April followed by March’s net migration figures on Tuesday. These two sets of figures are tightly linked at present, with rents having been rising strongly in recent months, not least due to the big influx of new people into the country (and a tight-ish supply of available rentals too). That said, there were signs in the previous releases that both indicators are close to a turning point, if not past it already, and I’ll be watching closely for any further evidence this week. For people looking for a rental, however, it’s probably cold comfort, given that rents are already at a record high in relation to household income.

4. High debt-to-income lending likely to be restrained

It’s a busy week for data releases, and on Wednesday the Reserve Bank will publish figures for January to March on the amount of lending being done at high debt-toincome (DTI) ratios – now considered to be seven for investors and six for owneroccupiers. Given that mortgage rates

remain high, which is naturally capping high DTI lending anyway, the latest published figures themselves won’t be of too much interest. But DTIs more generally remain firmly in the spotlight, given that formal restrictions are set to be imposed very soon. I think these rules will mark a significant shift in our lending landscape, tending to tie house prices more closely to incomes over the long term, and slowing down the rate that investors can grow a portfolio.

5. Some quick notes from my travels

Just finally, I spent a lot of time last week out and about visiting clients and presenting to various audiences, including property investors and banking professionals. The strong vibe is that the “real” economy is hurting, but people also seem to accept that interest rates won’t decline until inflation is firmly back in the box. Meanwhile, the appetite to buy and invest in property seems to be as strong as ever, but it’s going to be tricky to turn that sentiment into actual purchases until mortgage rates drop more significantly. Maybe a story for 2025, not necessarily 2024.

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

Superb.

New Location for Supercity Property Management

It is with great pleasure to announce that Ray White Supercity Property Management Ltd has moved to 4/27 Mount Eden Road, Grafton.

We believe that our new office provides better visibility and accessibility for tenants, landlords and suppliers.

We believe that our new office provides better visibility and accessibility for tenants, landlords and suppliers.

NEW ADDRESS:

Ray White SuperCity Property Management

4/27 Mount Eden Road, Grafton, Auckland Central 1023

PHONE: 09 308 5500

If you have any questions or concerns about the move, please feel free to contact us at any time. We thank you for working with us and look forward to seeing you at our new location.

Is it time for a change?

Kurt Smith

General Manager

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 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.

SALES TEAM - SANDRINGHAM OFFICE

Horrobin

Pauline Bridgman

Henson

Amy Tsai

Kate Jiang

Tania Greer

Tracey Potter

Tim Cai

Diane Goer

Emily Hu

Ivan Koulin

Yuhei Umezaki

Hugh Free

Daniel Chen

Jackie Zhang

Alastair Hubbard

Susan Woods -Markwick

Rosa Solano

SALES TEAM - MOUNT ROSKILL OFFICE

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

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

Jamie Maclennan

Davy Chen