Short commentary on Eastern Suburbs' real estate market statistics for April 2019
Have you heard of the phrase in investing circles: Sell in May and Go Away?
This is an investment strategy for stocks based on a theory (known as the Halloween indicator) that the period from November to April inclusive has significantly stronger stock market growth on average than the other months. So you will sell stocks in May and then return to the market during Halloween.
Whether this applies to the Auckland property market remains to be seen. Traditionally, as we enter into winter, the supply of houses falls. People prefer to avoid sell in winter on the basis that bad weather deters crowds.
I examine this belief below.
If you are impatient (!), you can skip to the relevant sections:
– Eastern Suburbs’ (Orakei, Mission Bay, Remuera, St Heliers, Glendowie, Kohimarama, Meadowbank, Glen Innes St Johns, Stonefields) market statistics and general observations
Auckland's property market statistics for April 2019
Compared to March 2019
Compared to April 2018
- Median down 0.9%
- Sales Count down 21.9%
- Days to Sell decreased by 1 day
- Median price remained the same
- Sales Count down 16.3%
- Days to Sell increased by 4 days
Let’s have a look at headline numbers for Auckland.
Sales volume is down quite substantially, although not surprising since we had a long 10 day break between Easter and ANZAC day which coincided with the school holidays. This meant that people were away on holidays rather than looking for houses to buy.
Now that Capital Gains Tax is officially off the table, more certainty is likely to return to the property market. But as we head into the winter months, the volume of sales is likely to decline, following traditional patterns.
Although previously argued that Australia’s housing market is different from New Zealand, for those who believe that the Australia’s slowdown will eventually spread to New Zealand and Auckland’s property market, the fact is that the decline in prices is slowing down and many believe the worst to be over, especially when the Reserve Bank of Australia is looking to cut rates and servicing requirements (will RBNZ do the same?).
As I have pointed out in previous market updates, this is a property market requiring vendors to understand the market they are selling in and to realise that what they hope to get might not be what the buyers are willing to pay. That being said, there are certain things you can do to maximise your final sale price – keep reading.
Eastern Suburbs' market statistics and general observations
Covering the real estate market of Orakei, Mission Bay, Kohimarama, St Heliers, Glendowie, Remuera, Meadowbank, Glen Innes, St Johns, Stonefields and Wai O Taiki Bay
Note 1: Suburbs with less than 5 sales (for e.g. Wai O Taiki Bay) will not have the median property price displayed for statistical and privacy reasons. Also, note that the median property price for each suburb may see large fluctuations given the relatively low number of sales on a monthly basis.
Note 2: The REINZ uses unconditional sales data (when the price is agreed) rather than at settlement, which can often be weeks later. It is therefore more accurate and timely.
Trends in Orakei, Mission Bay, Kohimarama, St Heliers, Glendowie, Remuera, Meadowbank, Glen Innes, St Johns, Stonefields and Wai O Taiki Bay real estate markets
The Eastern Suburbs market has generally tracked Auckland’s decline in sales volume although this time round, prices have gone up compared to same time last year. Perhaps it goes to show that the market here is a bit more resilient compared to other Auckland suburbs.
The reason for declining sales volume but relatively stable prices could be due to the fact that credit, while cheap, is very tight. New Zealand currently has a tough bank lending environment due to high serviceability requirements that makes borrowing a pain (or outright impossible) for some buyers. This in turn leads to decreased borrowing (in particular for investors) and sucks the wind and energy out of the property market.
And it looks set to get worse. New increased capital proposals threaten to increase mortgage lending costs and/or cut lending to increase return on equity.
Looking at bank lending figures, this is consistent with the above. Interest.co.nz has pointed out that “the $5.769 billion total borrowed in what is usually a busy month was the lowest total for a March recorded in a series that the RBNZ has been publishing since August 2014.”
However, first home buyers are still around, and lending to them have increased year-on-year. If your property is suitable for first-home buyers, then you can still expect strong interest provided it’s well-located and well-presented.
Some property investors (long-term buy & hold types) are also preparing to sell so this would be positive news for first-home buyers who now have quite ample choices on the market. (I’ve got two on the market right now so have a look here).
If you are selling and expecting investors to be interested in your property, then your property will need to be attractively priced or it offers some upside potential (for e.g. easy do-up for a long-term buy and hold, possibility of subdividing etc). The increased focus on yields by such investors, rather than the traditional ‘speculator’ focused on quick capital gains, will mean that such properties will need to be attractively priced with a clear route to solid rental demand. This is expected to be more obvious as the Labour government phases out negative tax gearing.
So Is Now A Good Time To...
Sell In The Eastern Suburbs?
Any time is always a good time, as long as your motivations are correct and the sale of the property meets your life goals. (And you have got a good real estate agent to guide you of course!)
But here are 3 tips I hope you find useful in achieving a top price in this current market.
Tip 1: Is your property ‘bank-friendly’?
This means it needs to have good title (see my cross-lease article) with no unusual covenants, no major building consent/CCC or leaky issues and a ‘clean’ Sales and Purchase Agreement with no unusual conditions.
I would argue that this is even more important than exterior and interior presentation – because bad presentation can be overlooked by purchasers who may find it acceptable at what is likely a reduced price. At least you will still get offers!
If your home is not “bank-friendly”, then you may find that you will receive not a single offer, even if the house is immaculately presented. Why? Because the purchasers can’t get lending and there are very few cashed-up buyers around today (and these buyers know that they are a much-sought after group).
No matter how good your real estate agent is in negotiating (and I do know many think that’s the most important skill which is understandable), we know that you can lead a horse to water but you can’t make it drink. Similarly, no real estate agent can make a buyer buy if the buyer cannot afford it without a loan!
Tip 2: Consider selling your property in winter. Really!
I know what you are thinking. “Ruoxi is asking me to sell because she’s a real estate agent and any time is always a good time.”
If you think winter is a bad time to sell, I would urge you to think again. Buyers looking around in winter are far more motivated than casual lookers in spring or summer, especially when rain is pouring down the Eastern Bays or a storm is brewing over the horizon when standing on Tamaki Drive.
So my questions for you to consider before you sell in winter are these:
- Is your house warm?
- Is your house insulated?
- Does it come with a cosy fireplace?
- No leaks or broken drains?
If your answers are all in the positive (or these issues are easily fixed)…Congratulations! Your house may be a prime candidate for a wintry showcase.
The warmth of a house greeting a visitor who has just stepped in from the bitterly cold and wet Auckland weather will leave a very positive impression! In addition, your house faces less competition from neighbouring properties so it will stand out. If you have a few spring/summer photos, using those may help to help a buyer imagine what it’s like to live there when the sun’s shining again.
Tip 3: Get A Solid Marketing Plan To Maximise Your Chances
But you really need a solid marketing plan in this increasingly challenging property market – you can’t sell a secret so it pays to invest in a great agent with a very different marketing plan to maximise exposure of your property.
It would be very wrong to view marketing as an unnecessary ‘cost’ or ‘expense’ to be minimised. Some real estate agents will invariably tell you to just ‘list it online and print’ and the buyers will ‘come anyway’.
I think that’s just sloppy and leaving it to chance – i.e. ‘list and pray’. But more importantly, that would miss the entire point of marketing, which is to cast a net as wide as possible in order to maximise your chances to reel in the right-sized fish (i.e. the right buyer paying the desired price).
Found this post useful and have more questions?
I have detailed statistics at my fingertips, including recent sales within the Eastern Suburbs (or any suburbs), so do not hesitate to contact me for a no-obligation discussion over coffee on your future plans to either buy or sell.