Auckland Central Market Report - September

Auckland Central Market Report.

Part of the group with a family factor.

Contents.

04. Market CommentCollective holding of breath stalling activity.

08. Auckland Central Statistics August 2023

06. Article – Tony Alexander: All those extra migrants are going to need somewhere to live

10. Recent Sales August 2023

12. Auction Statistics & Update with Cameron Brain

14. Article – Kelvin Davidson: Are stressed homeowners taking a punt on ‘risky’ mortgage rates?

16. Property Management Market Comment

18. LoanMarket Update

20. Marketing your property

22. Ray White Auckland Central Meet the team

Collective holding of breath stalling activity.

“We can’t wait for the back-end of this coming election, because in the leadup to it sellers are sitting on their collective hands reluctant to list for sale right now,” says Director of City Realty Group, Daniel Horrobin

REINZ reports: “With sales counts up this month, the national inventory level is falling. More competitive prices and a ‘get in now’ attitude is bringing more buyers out ahead of this year’s election.”

“To be fair,” Daniel adds, “there are significant outcomes, particularly for investors, depending on the election result this time around.”

Available stock for sale in the CBD remains steady hovering around the 500 mark with no signs yet of bouncing back to previously seen higher levels.

On a positive note, the City Central office rated in the top 10 from more than 180 offices nationwide at the annual Ray White NZ awards.

Daniel says: “We are delighted to make the top 10 for the 2022/2023 year. As always however, improvement beckons.” The awards evening followed the annual Ray White Conference held at Aotea Centre and was the first time either event has been held since Covid hit our shores.

August was a solid month for our Auckland Central office with both listings and sales robust. The auction room reflected the REINZ comment above with competitive bidding seen across almost all properties.

Also, during the month the Reserve Bank left the official cash rate unchanged at 5.5%. Despite that, Data from Canstar shows a flurry of increases to fixed home loan rates last week.

Infometrics chief executive Brad Olsen said the moves highlighted the “increasing cost of borrowing on the international market.”

Commenting on interest rates an ASB senior economist said: “There are so many moving parts I think we could continue to see volatility through the rest of the year. This is not just a New Zealand thing.”

On top of that a prominent Auckland city legal firm reports: “The number of mortgagee sales is increasing in mid-2023. We expect these sales will increase further as more borrowers come off fixed interest rates and, for many, financing becomes unaffordable”. However there is little evidence yet of these increasing mortgagee sales being reflected in the city apartment market.

Meanwhile, economists predictably cannot agree on where exactly the wider property market is heading. Westpac chief economist Kelly Eckhold says: “The bank expects an 8% increase in house prices in 2024. The main factor driving is the expected impact of migration and population growth.” Whereas chief property economist at CoreLogic, Kelvin Davidson, says he: “expects prices to rise between 3% and 5% next year, broadly in line with incomes”. Eckhold says: “The wildly differing views on what could happen depend on the extent to which people expect interest rates to affect house prices.”

Back home in the city centre rental space, upward pressure on rents continues. Website interest.co.nz reports: “While there are likely several factors which feed into where rents are set, the latest increase corresponds with a big surge in immigration that has occurred this year, with almost 17,000 foreign workers arriving in New Zealand in the month of June alone. It’s likely Auckland was their main destination”.

Daniel says: “It appears large numbers of those Auckland bound also have the central city high on their list of preferred locations.”

To summarise, Daniel repeats his advice from last month: “With spring upon us and buyers active, waiting may mean you are competing with a legion of sellers who waited just like you.”

Tony Alexander: All those extra migrants are going to need somewhere to live

Worries about finding a property likely to increase.

ANALYSIS: Statistics New Zealand have just announced that in the year to July there was a net loss of Kiwis offshore of a near record 39,000. This is more than double the average loss each year since 2001 and probably makes sense to a lot of people in light of the many conversations we seem to be having about leaving the country.

One of the clear themes to come through from my monthly survey of businesses with Mint Design is that the outcome of the October 14 general election will play a big role in whether plans are advanced for expansion and maybe even personal location.

But while some months back these popular discussions about leaving probably dominated people’s thoughts and made them think population growth was still slow and suppressing the housing market, now the conversation has likely changed. This is because the flood coming into New Zealand of Indians, Filipinos, Chinese, and South Africans in particular is so large the net flow across all nationalities is now a gain of over a record 96,000 people.

This is equivalent to a 1.9% boost to our population and all of these extra people need somewhere to live. That is placing pressure on the rental market and in turn placing pressure on young people to consider accelerating their plans for making a home purchase. As yet it is hard to find

Migration numbers are on the rise and so are house prices. Photo / Fiona Goodall

solid evidence that the new rental sector pressure is causing the rate of growth in rents to accelerate. But competition for accommodation is probably enough to turn many minds towards buying. That buying has in fact already lifted strongly as seen in REINZ sales data released this week. In seasonally adjusted terms over the past three months to August house sales have grown by about 8% after rising nearly 20% in the three months to May.

Prices are also rising and now sit 2.1% above their lows nationwide. Average Auckland prices have so far recovered 3.1%, Wellington prices 3.5%, and Canterbury prices 3.0%. Average prices nationwide are still 1.1% below levels at the end of last year but the way things are progressing my long held view that gains this year will end up near 5% looks to be on track.

Next year gains nearer 10% are likely, especially as falling interest rates will make purchasing possible for many people who currently want to buy but cannot meet debt servicing requirements set by banks. The migration boost next year is likely to still be there, but probably not as large as we have seen in the past year. A gain perhaps near the average from 2014-19 of 55,000 seems reasonable to assume.

The strong population pressure is an important development for the home building sector. For over a year we have seen liquidations of businesses in the residential construction sector and many more look likely to happen. Costs have soared but ability to recoup these rises from buyers has been difficult. Some people have lost their deposits as projects have collapsed and for now that has caused some buyers to veer away from purchasing a new build towards buying an existing house.

But as house prices climb further, the stock of listings goes down, and worries about finding a property increase, people will turn their attention back towards getting something new built. For builders the message here is, if they have not already done so, to batten down the hatches to get through the period of low demand and be ready for when the buyers come back again.

When might that happen? Probably 2025 and perhaps even towards the end of next year – in the cities at least. In the regions there is going to be suppression of housing turnover, prices, and construction by weak export prices for farmers along with the possibility of a strong El Nino weather pattern bringing drought to many areas - on the east coast in particular.

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

Market Statistics.

Total Sales

August 2023

August 2022

August 2023

$268,500

August 2022

There was a -49% decrease in the total number of sales year on year.

Total Sales Value

52 $21,767,000

August 2023

August 2022

102 $52,081,750

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

$420,250

There was a -36% decrease in the total median sale price year on year.

Median Sales Price Median Days On Market

August 2023

39

August 2022

35

There was a 11% increase in the total median days on market year on year.

Source: REINZ

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

Auction Comment. Ray White Auckland Central.

Auckland Central Auction Market:

A Surging Pre-Election Wave.

As the October 14 election day approaches, the Auckland Central Auction Market is experiencing an unexpected surge in activity. Historically, past election years have witnessed a drop-off in market activity, but this year tells a different story.

The Auckland Central Auction Market is abuzz with urgency and fervour, defying conventional trends.

A noteworthy development is the impressive performance of Ray White Auckland Central’s auction clearance rate. In September alone, the clearance rate stands at an encouraging 55%, with many properties that did not sell at auction subsequently finding buyers through negotiated offers. Year-to-date, the clearance rate reaches an impressive 72.78%, a testament to the resilience of the market in a year marked by unpredictability.

Bidder participation has also seen a notable uptick. In September, nearly three bidders vied for each property, surpassing the New Zealand average of 2.7 bidders per property. This increased level of interest indicates a robust demand for properties in the Auckland Central area.

As we stand 93 days away from Christmas, a pivotal consideration arises for both buyers and sellers. With only a few weeks left to launch properties onto the market for sale

and achieve settlements before the holiday break, time is of the essence. For those contemplating a sale, now is an opportune moment to act.

The Auckland Central Auction Market is uniquely positioned to navigate the complexities of the current real estate landscape. With a team of experienced professionals, Ray White Auckland Central is dedicated to assisting you in achieving your desired results. Whether you’re a buyer or a seller, our team is committed to providing unparalleled expertise and support.

In conclusion, the Auckland Central Auction Market is experiencing a surge in activity, defying historical trends associated with election years. The impressive auction clearance rates and heightened bidder participation reflect the resilience and vitality of the market. With the holiday season fast approaching, the time is ripe for those looking to buy or sell. Contact our seasoned team at Ray White Auckland Central, and let us guide you towards success in this dynamic market.

Auctioneer & Auction Manager

Kelvin Davidson: Are stressed homeowners taking a punt on ‘risky’ mortgage rates?

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

1. Short or long?

Last week’s Reserve Bank figures showed a renewed rise in the share of new lending fixed for terms of up to two years (especially between one and two years), rather than the three-year horizon. In June, 46% of loans were fixed for up to two years, and 16% in the 2-3 year horizon, but in July, those figures were 50% and 12%. There’s often still value in the certainty offered by the longer term fixed rates, but the recent rises in those rates (which has flattened the curve) seems to have driven some borrowers back towards the shorter durations, which also reduces the risk of over-paying if mortgage rates were to drop over the next few years. Maybe in the end, with all of the other strains on household finances at present,

a lot of borrowers just have to take the cheapest rate at the time.

2. Still paying close attention to LVRs

Sticking with recent lending data, the loosening in the loan to value ratio rules from June 1 has certainly helped investors who were previously locked out by the requirement to have a minimum 40% deposit. With that requirement now standing at 35%, some investors are back in the game. The share of overall lending to investors has risen from less than 1% in May to 23% in July. To be fair, those extra investors might be topping up or even switching banks, rather than buying more properties, but the figures nevertheless

Kiwi mortgage-holders are facing a dilemma when it comes to refixing the terms of their loans. Photo / Fiona Goodall

show that LVRs still have an influence on the market, and when they are relaxed, the response can be pretty quick.

3. Repricing remains an issue too

When it comes to the lending

market

and the continued challenges that many mortgage-holding households are facing at present, we also shouldn’t overlook the ongoing repricing of existing loans from older, lower rates, onto the current market levels. Currently 53% of mortgages (by value) are fixed but due to be repriced in the next 12 months, and many of these will still be looking at a rise in mortgage rates of 1-2%. So far, this process has been managed very smoothly (e.g. mortgage arrears are controlled), with low unemployment helping people adjust to higher debt repayments. But it still might keep a lid on activity levels in the coming period, as people choose to focus on managing higher repayments rather than also trying to think about moving house too.

4. Migration might be easing but it’s still high

Stats NZ will publish July’s net migration data on Tuesday, and for context, these

figures have been easing a little lately, as departures rise and arrivals slow. But they’re still very high – about 5000 in June (versus historical average of about 2500) – and this week’s figures will probably be broadly similar in terms of the broadly strong trend. Clearly, high net migration means high population growth, and extra demand for property – stimulating housing activity and prices.

5. Rents to accelerate again?

Stats NZ will also release rental data this week, relating to August (Wednesday). Generally speaking, investors have been finding it tricky to expand their portfolios lately, and with the demand for property rising (e.g. due to net migration), there have been signs in the past few months that rents are starting to increase more quickly again too. For example, July’s figure was 4.1% higher than a year ago, the fastest rise since June last year. The longer-term scope for rents to rise will tend to be capped by the fact that they’re already high in relation to incomes, but we do still seem set for a coming period of faster rental growth.

CoreLogic chief economist Kelvin Davidson: “Investors are back in the game.”

Photo / Peter Meecham

Market Comment. Property Management.

Property Management Comment: September 2023

The Auckland rental market is still going strong as we head into spring. There has been a slight drop in both supply and demand but this has not affected rents or days on market. The average days on market for Auckland wide is sitting under the 3 week mark which is really positive.

The national median weekly rent held steady at $620 for the second consecutive month in July. Auckland rents showed a 11.7% increase from July 2022-July 2023.

While prices might be staying stable for renters, urban options in city centres remain popular –with apartments, townhouses and units seeing strong demand.

Apartments and units in Auckland city both saw new record highs in July. The median weekly

rent for an Auckland apartment was $580 – up 16 per cent. Likewise units were $540 – up 8 per cent.

Auckland urban properties (apartments, townhouses and units) are creeping towards the $600 mark, with Auckland City at $595.

The continuing growth in the rental market across the board is still largely due to positive immigration numbers.

Delanie Horrobin.

Recent reports also indicate that apartments are popular options in central cities – especially post-pandemic with a strong rebound of people wanting to be closer to the action that the city centre has to offer.

Calling First Home Buyers.

If your deposit and home loan don’t cover the full cost of purchasing a new home, First Home Partner may be able to help you bridge the financial gap by copurchasing your home with Kāinga Ora.

Co-ownership means that you are the majority homeowner, but initially share the initial ownership of the home with Kāinga Ora. Kāinga Ora contributes an agreed amount towards purchasing the home with you in return for an equivalent share in ownership. You then purchase this share back over time until you are the sole homeowner.

Craig Pettit 027 249 0010

To see if you’re eligible for the First Home Partner scheme, check the criteria below:

• Be over 18 years old

• To assist with the deposit Kāinga Ora may contribute up to 25% of the purchase price or $200,000 which ever is lower.

• Be a New Zealand citizen, permanent resident or resident visa holder who is ordinarily resident in New Zealand or

• Be applying with someone who meets the citizenship or residency requirements and you are married to or are in a civil union or de facto relationship with that person

• Have a total household income of no more than $150,000 (before tax) for the last 12 months

• Whānau in a household no larger than six may also be exempted from the income cap

• Be a first home buyer or previous homeowner in a similar financial position to a first home buyer

• Have not previously received shared home ownership support from Kāinga Ora.

• Be buying the home for you to live in as your primary place of residence and commit to living in the home for at least 3 years

• Be in a financial position to contribute a minimum deposit of 5% towards the home purchase

• Available for new build homes and existing properties

Terms and conditions apply. Not all homes are eligible for First Home Partner. Lending criteria of a participating bank will also apply. Speak to your Loan Market adviser to learn more.

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

Ady Huang Aileen Wu

Ben Parkes

Craig Warburton

Dom Worthington Dusan Valenta

Gillian Gibson Habeeb Urrahman

SALES TEAM - AUCKLAND CENTRAL OFFICE

Carl Russell Casey Chen Chris Cairns

Grant Elliott

Cheryl Whiting

Bosen Han

Holly Cassidy Jeong Lee

Chris Guilford

Amit Rana

Danika Ansley Derek Yin

OUR SALES SPECIALISTS

OUR LOANMARKET MORTGAGE ADVISORS

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

Kristine Liu

Lisa Hui

Marco Sahar Mark Li

May Ma Michelle Yurak Nick Armstrong Ryan Bridgman

Sam Huang Steve King Steve Kirk

Jorvarn Hicks

LoanMarket Mortgage Adviser LoanMarket Mortgage Adviser

Craig Pettit Laurie Warren

Louise Stephens

Nicholas Dallyn

Ross Tierney

Leo Zhang

Leo Zhu

Sunniva Gu

Judi Yurak Keisha Gutierrez Krister Samuel

Lisa Zhang

Gabriela Galateanu

Max Beliak

SALES TEAM WYNYARD QUARTER OFFICE