Auckland Central October Market Report

Auckland Central Market Report.

2022

Part of the group with a family factor.

CREATE RECOGNISE GROW

CITY REALTY GROUP

Contents.

Market Comment

Article – Tony Alexander: Will voters’ shift to the right bring back investors?

Auckland Central Statistics 10. Recent Sales

Article – Catherine Masters:

Listings are up, prices are down: Can first home buyers get ahead?

Auction Statistics & Update with Cameron Brain

Marketing your property 24.

Ray White Auckland Central Meet the team

Market Comment.

Ray White Auckland Central.

Increasing inquiries and strong auction clearance rates for Ray White Auckland Central

Ray White Auckland Central are seeing increasing levels of inquiry and have had another month of strong auction clearance rates in September.

Director of City Realty Group, Daniel Horrobin, says: “We had active bidding on all our auctions in September, including those properties which were passed in. There were no auctions which failed to see bidding. “Our auction clearance rates are now sitting at 65% over the last three months and 72.85% year-to-date.

“We constantly monitor the success rates of properties sold by auction compared to properties sold by other methods and know auctions continue to produce the best results. Auctions involve much more than just the actual auction as there can be pre-auction offers, properties sold under the hammer and properties sold as a result of negotiations post auction.”

Inquiry levels about city apartment properties have increased month on month with a number of buyers feeling around to gauge the bottom of the market.

Daniel says: “There has been commentary that the OCR may continue to increase in efforts to harness inflation, fuelling even higher interest rates. Because of this there are buyers motivated to act now in order to avoid those higher interest rates.”

The City Apartments market is still predominantly driven by investors, who tend to be well-informed, savvy buyers. “They typically understand the market, financial conditions and what return on investment they will achieve.”

City Apartments rental portfolio is also benefiting from an increase in inquiry levels. Some of this can be attributed to the number of migrants in the central city slowly increasing. A significant surge is anticipated when considerable numbers of international students arrive to study in central Auckland early next year.

Daniel says: “We are pleased to report that rental levels of inquiry are continuing to increase.

“Many properties are being rented after just one or two viewings. There’s an increase in demand from people currently living overseas seeking to secure accommodation prior to arriving in Auckland.”

Trade Me monitoring provides evidence of this increasing rental activity. They reported a decrease in number of listings by approximately 1000 and a substantial increase in demand of approximately 10,000 for rentals in Auckland CBD between July 2022 and August 2022.

Tony Alexander: Will voters’ shift to the right bring back investors?

ANALYSIS: For over two months I have been noting the return to the residential real estate market of first home buyers. We can easily see this in my monthly surveys of mortgage advisors and real estate agents. For instance, in my monthly survey of mortgage brokers a net 47% most recently have said that they are seeing more first time buyers in the market. A net 27% of real estate agents also say that they are seeing more first home buyers.

But are we seeing more investors in the market? Each of my five monthly surveys gives some insight into what investors are doing and collectively while they show investors are becoming a little bit more interested in the market none of them are truly showing that the investors are coming back.

A net 5% of mortgage advisors a few weeks ago said that they are seeing fewer investors coming forward looking for advice. This

was, however, better than the net 33% four weeks earlier and was the least negative outcome since the start of 2021. A net 28% of real estate agents still say that they are seeing fewer investors. This is an improvement from 34% at the end of August and the least negative result since February 2021. But it is still firmly negative.

My monthly survey of consumers in general has shown reasonably consistently since March this year a net 10% of people planning to cut back on their purchases of investment property. There is no improving trend underway.

But my two other monthly surveys, which focus specifically on investors, do show some greater degrees of interest. The monthly survey of portfolio investors which I run with Sharesies most recently showed a net 17% of respondents planning to increase their purchases of residential property. This was up from 15% a month

earlier and the strongest result since the survey started in October last year.

And finally, the monthly survey of existing residential property investors which I run with Crockers Property Management last month showed a net 10% planning to increase their property purchases. In the previous month a net 1% were still planning to cut back on their property holdings.

The surveys do not in my opinion add up to a case for saying that investors are coming back into the market so that their new buying exceeds their new selling. But it does look like they may be paying interest in the reports of first home buyers at least starting to take advantage of the doubling in listings from a year ago and the strong fall in prices from the peak of late 2021.

One interesting thing to keep an eye on will be whether the shift away from left-leaning candidates in local body elections will be considered as a strong indication of what is likely to happen in the general election late next year. If people believe a shift away from the left in New Zealand truly is underway, then this may encourage some investors to do what the first home buyers are doing and take advantage of vendors increasingly willing to meet the market.

This is because the National Party have said that they will reverse all the tax increases which have been imposed and are set to be imposed by Labour (and the list of them seems to keep growing). The most important one here is Labour’s removal of the ability of residential property investors to deduct interest expenses when calculating their taxable income.

commentary from him

be found at www.tonyalexander.nz

Tony Alexander: “National Party have said that they will reverse all the tax increases which have been imposed and are set to be imposed by Labour.”

- Tony Alexander is an independent economics commentator.

Auckland Central.

Market Statistics.

Total Sales

There was a 8% decrease in the total number of sales year on year.

Total Sales Value

There was a 46% decrease in the total sales value year on year.

2021

There was a 45% decrease in the total median sale price year on year.

Median Sales Price Median Days On Market

There was a 15% decrease in the total median days on market year on year.

Recent Sales.

AUCKLAND CENTRAL

ADDRESS BEDROOMS SALE PRICE SALE DATE

5e/508 Queen Street 1

$95,000 30-SEP-22

10d/76 Albert Street 1 $120,000 30-SEP-22 432/65 Fort Street 0 $75,000 30-SEP-22 432/65 Fort Street 0 $75,000 30-SEP-22

7c/32 Eden Crescent 1 $320,000 30-SEP-22 1102/22 Nelson Street 1 $700,000 29-SEP-22 1003/1 Hobson Street 1 $820,000 29-SEP-22 1503/11 Liverpool Street 1 $180,000 29-SEP-22 905/32 Swanson Street 2 $649,000 29-SEP-22

8i/23 Emily Place 1 $290,000 29-SEP-22

1112/10 Waterloo Quadrant 2 $362,000 29-SEP-22

9a/8 White Street 2 $300,000 28-SEP-22

12k/76 Albert Street 1 $125,000 28-SEP-22 2003/8 Albert Street 1 $622,000 28-SEP-22 305/1 Parliament Street 1 $510,000 28-SEP-22 503/15 Union Street 1 $300,000 27-SEP-22 B/203 Hobson Street 1 $640,000 27-SEP-22 1d/508 Queen Street 1 $108,000 27-SEP-22 509/141 Pakenham Street 2 $1,925,000 27-SEP-22 10g/14 Waterloo Quadrant 2 $270,000 27-SEP-22 313/57 Mahuhu Crescent 2 $177,000 27-SEP-22

4d/508 Queen Street 1 $129,000 26-SEP-22

1f/508 Queen Street 1 $90,000 25-SEP-22

9b/76 Albert Street 1 $80,000 24-SEP-22

3b/92 Nelson Street 1 $373,000 23-SEP-22

13d/8 Bankside Street 1 $265,000 23-SEP-22 410/147 Nelson Street 2 $485,000 22-SEP-22

4j/508 Queen Street 1 $85,500 22-SEP-22 112/77 Halsey Street 1 $145,000 21-SEP-22 213/83 Halsey Street 2 $700,000 21-SEP-22

3d/113 Vincent Street 2 $120,000 21-SEP-22

4a/13 Mount Street 1 $230,000 20-SEP-22

ADDRESS BEDROOMS SALE PRICE SALE DATE

3C/6 Victoria Street East 1

$350,000 20-SEP-22

906/6 Lorne Street 1 $300,000 20-SEP-22 1806/6 Lorne Street 3 $1,522,000 20-SEP-22 1202/6 Lorne Street 1 $380,000 20-SEP-22 1208/18 Beach Road 3 $172,500 19-SEP-22 307/155 Beaumont Street 2 $1,400,000 16-SEP-22

10A/15 City Road 1 $80,000 16-SEP-22 624/430 Queen Street 2 $283,500 16-SEP-22 1801/26 Albert Street 1 $800,000 16-SEP-22 37/143 Quay Street 4 $3,350,000 16-SEP-22 602/2 Beach Road 1 $25,000 16-SEP-22 613/133 Beach Road 1 $40,000 16-SEP-22

1 The Boardwalk 3 $1,340,000 15-SEP-22

2D/208 Hobson Street 2 $292,000 15-SEP-22 412/47 Hobson Street 1 $540,000 15-SEP-22

3J/16 Liverpool Street 1 $182,000 15-SEP-22 1203/1 Parliament Street 2 $720,000 15-SEP-22 5G/156 Vincent Street 1 $345,000 14-SEP-22 1008/30 Beach Road 1 $72,000 13-SEP-22 607/2 Dockside Lane 2 $139,000 12-SEP-22 502/75 Halsey Street 1 $200,000 9-SEP-22 608/17 Vogel Lane 2 $527,500 9-SEP-22 1323/430 Queen Street 1 $345,000 9-SEP-22

904/27 Rutland Street 1 $715,000 9-SEP-22

5K/14 Waterloo Quadrant 1 $183,000 9-SEP-22 108/70 Sale Street 2 $1,050,000 8-SEP-22

11F/82 Wakefield Street 1 $43,000 8-SEP-22

717/10 Waterloo Quadrant 2 $365,000 8-SEP-22

11C/82 Wakefield Street 1 $55,000 7-SEP-22 4D/11 Durham Street East 1 $395,000 7-SEP-22 1122/147 Nelson Street 1 $530,000 6-SEP-22 331/35 Hobson Street 1 $305,000 5-SEP-22

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

Recent Sales.

ADDRESS

Queen Street

Pakenham Street East

Waterloo Quadrant

Anzac Avenue

Beach Road

Day Street

Nelson Street

AUCKLAND CENTRAL

BEDROOMS SALE PRICE SALE DATE

$290,000 3-SEP-22

$700,000 2-SEP-22

$255,000 2-SEP-22

$35,000 2-SEP-22

$20,000 2-SEP-22

$82,100 1-SEP-22

$495,000 1-SEP-22

Pakenham Street East $240,000 1-SEP-22

Wakefield Street

Beach Road

$348,000 1-SEP-22

$110,000 1-SEP-22

Catherine Masters: Listings are up, prices are down: Can first home buyers get ahead?

First home buyers are emerging from an enforced house buying slumber, although the road to home ownership is still not easy.

Tweaks to Government regulations and home loan schemes, however, have eased the pain a bit after a difficult few years, say agents and commentators.

The relaxation of the stringent CCCFA (Credit Contracts and Consumer Finance Act) lending rules banks have been applying around home loan applications has seen newbies being able to dip their toes in the water again - and those rules are due to be further loosened, although the next wave of changes won’t take place until March.

Some have said next year is not soon enough because the CCCFA, which has seen banks examining expenses on the bank statements of would-be borrowers with a magnifying glass, has stopped many first home buyers in their tracks.are some questions that might help you to decide whether waiting is really the right choice for you:

A win for first home buyers, though, was this year’s Budget announcement of the removal of first home loan caps nationwide and the increasing of the price caps for first home grants.

But even with the tweaks and the housing market having turned a little in the favour of first home buyers, meaning they can take a bit of time to look around and put in offers with conditions attached instead of trying to buy unconditionally at auction, many say new buyers should not take too long to make up their minds.

The rollercoaster housing market changes direction quickly and not-if-but-when it flips back to a sellers’ market first home buyers could again struggle to compete. Caveats to the good news for first home buyers is not just high inflation and rising interest rates but the fact banks are testing people’s ability to repay mortgages on much higher rates.

A sold sticker on a real estate sign. In the space of a few months the market has swung from FOMO (fear of missing out) to FOOP (fear of overpaying)

Interest rate pressure

Rupert Gough, CEO and owner of the Mortgage Lab, says interest rates are the really big problem in the first home buyer market because higher rates mean people lose a significant amount of their buying power.

“If they could have afforded $1m last year for a mortgage it would be about $850,000 this year.”

Given house prices have dropped, this is still a more preferable scenario to being approved for $1m but not being able to snare a house at all amid the buying frenzy last year, Gough says.

“I think there was a lot of despair around ‘I can’t find a house’ a year ago and now it’s back to ‘I can’t afford the house I want’. That’s a huge change.”

Gough also says people haven’t grasped the magnitude of geographical barriers being removed from the first home loan price caps, saying anyone earning less than $150,000 can access the first home loan scheme and with a low deposit.

“That kind of salary gets you about $800,000 of borrowing. That’s anywhere in New Zealand and $800,000 in some parts of New Zealand buys a lot – you could get a four-bedroom house in the provinces.”

Economist Benje Patterson, however, urges caution about buying far from home just for the sake of getting on the property ladder. “Over recent years we’ve seen a lot of people pushed in to places they don’t actually really want to live, both suburbs and also other parts of the country. “Some of that is not necessarily because of the allure of the place they’ve moved too, it’s more that they think they need to have a house at all costs.”

Patterson says he has peers who are “not completely comfortable” with where they have ended up and some have found themselves stuck in a place that doesn’t quite fit them and far from their social connections.

If they were entering the market now, with the FOMO having dissipated, they may have decided not to uproot themselves, he says.

Economist Benje Patterson: ”If the unthinkable ever happened and they went to something like 12 or 15 percent would I have a way to get through?

Changing mindset

Patterson also says first home buyers should work out their own mortgage repayment budget on very high interest rates, regardless of whatever the banks’ short-term stress test rates are, because anything can happen.

He says he bought when rates were about 5 per cent but was always looking at how he would cope if they were 10 per cent or more.

”If the unthinkable ever happened and they went to something like 12 or 15 percent would I have a way to get through?”

While high inflation has grabbed headlines with stories of people cutting back on their spending, Patterson says the untold story is what happens when people refix their mortgages.

That’s because they have to find a lot more money to pay back the loan.

“If you have half a million dollars of debt, for every percent your mortgage rate goes up, that’s $5000 of additional interest.”

But mortgage broker Solomon Kurukuntala, from the Loan Market, who works in first home buyer areas in Auckland’s south,

says he’s noticed changes in the first home buyer psyche of late.

For a start, the phones are ringing again –but Kurukuntala says first home buyers are also coming back to the market far more educated and much more sensible.

They are more accepting of the higher interest rates whereas at the beginning of the year they were shocked at how they were soaring: “Now they realise that is the reality and people do understand inflation and everything.”

And while the banks have dialled down on the CCCFA stringency, Kurukuntala says the strictness over the first half of the year contributed to a change in the culture of how first home buyers manage their finances.

“They realise they can’t keep spending the way they used to before and also have a mortgage.”

People are also realising there is no point stretching their budgets to the maximum of their loan approval, he says.

“In 2020 and 2021 if people got approved for $1m they wanted to buy a house for $1.2m but now the trend is if they’re

Catherine Masters: Listings are up, prices are down: Can first home buyers get ahead? Continued...

approved for $1m they are looking at houses at $900,000.

“They know very well the way things are going with interest rates and other costs if they want to spend $1m or more then that it’s going to put a lot of burden on them.”

Kurukuntala also thinks first home buyers are relying on brokers more than banks, and shopping around among brokers, to make sure they are getting the right information

and the best deal.

Developers have become more realistic, too, he says, which helps because they are selling property for a fair price as opposed to wanting more than what the house was worth in last year’s market.

“As a broker I called all my first home buyers who couldn’t buy last year and told them the market is changing; now investors are out; now it’s your time to get in and buy.”

Missed opportunities

James Wilson, head of valuations for OneRoof’s data partner Valocity, says first home buyers who think they can’t afford to buy a home should not be swayed by advice from mum or dad or family but should talk to their bank or a broker.

“Go and find out the facts because you may be surprised, you could be a lot closer to being able to buy than you think.”

But he says even though house prices have fallen first home buyers shouldn’t be fooled into expecting the market to fall further, saying while that may happen the minute the market stops softening it could take off upwards again quickly.

“Usually, before you realise it’s happening, you’re locked out again so don’t fall into the trap of sitting back and waiting.”

The ASB’s chief economist, Nick Tuffley, says he sees two big positives for first

home buyers at the moment – one is house prices are likely to keep falling into the early parts of next year, and the other is the disappearance of the FOMO factor.

“They’re able to buy properties a lot more on their own terms of how they go about it and any potential conditions they put on the purchase.”

With interest rates the way they are debt servicing affordability is an issue as first home buyers generally start from low deposits but want to borrow a lot.

But Tuffley points out there have always been, and always will be, cycles in prices and interest rates.

“We’ve got to take that perspective that we get these periods where interest rates may be quite high and that can make life a bit challenging for a year or two but they are not always going to remain at those levels.”

As we hit the Spring market we are seeing an increase in buyer activity with more buyer engagement at our Auctions.

The City Realty Group (CRG) continues to buck the trend with a clearance rate of 64.82% year to date after 398 Auctions.

Our Auckland Central Office, which focuses on Apartments through Auckland Central & the City Fringe suburbs continues to see investors bidding strongly in their Auction rooms focusing on properties in the under $500,000 category and has resulted in the strongest Auction Clearance Rates amongst the group at 75.57%.

These results continue at our Wynyard Quarter office which has seen good buyer demand for Leasehold Apartments with multiple bidders on the last two leasehold apartments being Auctioned during August.

On the Residential front, our Ray White Sandringham Office has a great pipeline of Auction through September and October with owners eager to take advantage of the Spring Market and current market conditions with some of the Auction properties seeing inspection numbers back to 30 groups over a weekend.

If you want to know more about our Auctions please feel free to contact me anytime.

Marketing your home.

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.

A COMPREHENSIVE MARKETING STRATEGY TO REACH ACTIVE & PASSIVE BUYERS.

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.

Ray White Auckland Central.

Why choose us?

We’re on the Up-and-up.

Based in the heart of Auckland City, Ray White Auckland Central is an award-winning agency in Auckland City that specialise in apartment sales for investment, luxury waterfront and lifestyle.

Our 183+ dedicated professionals who understand this unique market, are all top performers who have contributed to our phenomenal results. As the Auckland central market continues to experience unprecedented growth, our Lorne Street & Wynyard Quarter offices are well positioned to maintain its leadership in the market.

City Realty has a strategic partnership with LoanMarket, to provide clients with the best mortgage advice and rates with brokers throughout our offices that provide Home Loans, First Home Buyers Loans, Construction Loans, Refinance, Selfemployed Loans and Vehicle Finance – whatever the loan, LoanMarket can help.

Our office achieved the No.4 Ray White office in the world for 2018 and the No. 2 Ray White office in New Zealand for 2018 and we do the highest volume of sales across all agencies in New Zealand.

City Realty Limited (Licensed REAA

Leaders in the Auckland Apartment & Residential market.

Meet the team.

SALES TEAM - AUCKLAND CENTRAL OFFICE

Jean Ooi Jeong Lee

OUR

SPECIALISTS

Director

AML OfficerGeneral Manager

Sales Manager Auckland Central

Auction Manager

Sales Manager Wynyard Quarter

Daniel Horrobin Vikas Verma Cameron Brain Pauline Bridgman

Mike Richards Belinda Henson

Operations Manager

Jane Martin

Ady Huang Aileen Wu Chris Guilford

Casey Chen Chris Cairns

Craig Warburton David Lee Dom Worthington

Dusan Valenta Gillian Gibson

Habeeb Urrahman

Hindan Khan

Iona Rodrigues

Head of Recruitment

Adam Burke

SALES TEAM -

QUARTER OFFICE

Judi Yurak Justin Choi Keisha Gutierrez Krister Samuel

Leo Zhu Lisa Zhang Louise Stephens Marco Sahar Mark Li

May Ma Michelle Yurak Nick Armstrong

Oriel Lynn Ryan Bridgman

Sam Huang Sean Ma Siming Zhou Steve King Steve Kirk Warren Thomas

Our strongest team yet Selling right across Auckland Central & City fringe

Damian Piggin Gabriela Galateanu Max Beliak

Andrea Manni

Victor Liu

John Min

Rickus Moll

Create. Recognise. Grow.