Short commentary on Eastern Suburbs' real estate market statistics for April 2020 + COVID-19 Impact
It’s been great to be finally out and about after 6 weeks of ‘lockdown’. Whilst we have been showing houses through during Level 3 everyday whilst adhering to social distancing measures, nothing beats meeting people at our open homes, going to local restaurants and shopping freely at our local retailers.
And we are happy to say that open home numbers remain positive and we are seeing a good volume of foot traffic. Buyers remain cautiously optimistic, with many largely driven by their life circumstances (sold houses, wanting to buy their first homes or get back into property investment) and the record-low interest rates. Some have clearly expressed their views that the media predictions of a market crash are way overblown.
As we have previously pointed out, one certain fact is that nobody knows how this pandemic will play out. But in the face of uncertainty, those who choose to act very often reap those rewards. Fortune favours the brave after all.
If you are impatient, you can skip to the relevant sections:
– Eastern Suburbs’ housing market statistics and general market observations (covering Orakei, Mission Bay, Remuera, St Heliers, Glendowie, Kohimarama, Meadowbank, St Johns)
Auckland's property market statistics for April 2020
Compared to March 2020
Compared to April 2019
- Median price up 0.6%
- Sales count down 78.9%
- Days to sell increased by 1 day
- Median price up 9.4%
- Sales count down 68.8%
- Days to sell decreased by 2 days
Auckland market as a whole
Not surprisingly, volumes were down a massive 78.9% compared to March 2020 (just prior to lockdown) and around 70% compared to April 2019. This reflects the strong reluctance of buyers, despite modern technology, to transact without having feel and see the houses in person.
That’s not to say that modern technology or online marketing is ineffective. It’s actually even more important because, given today’s restrictions and the disappearance of print media (including Bauer Media which owns Property Press), buyers start their search online and spend more time online. But that nothing beats having buyers through to the properties and viewing them in person. There are many intangibles that remains impossible to convey via digital media for e.g. sunlight, orientation, noise.
But homeowners will be delighted to know that in the face of such uncertainty and ‘dire’ circumstances, prices have held very firmly and median prices in fact increased 9.2% compared to April 2019. The REINZ House Price Index (which adjusts for many factors) actually increased 9.4%.
What does this tell you?
- Resilience of property prices and homeowners who will refuse to give away their properties for a bargain
- Immense support from government and Reserve Bank to ensure long-term asset values are not destroyed – low interest rates, mortgage deferrals and wage subsidies etc
- Political uncertainty such as the possibility of capital gains tax (around Mar/Apr 2019) likely has an even greater impact than a pandemic
- No real evidence exists of desperate vendors who will sell at whatever price the market will bear
- We might be in early days, depending on which economist you choose to believe. And we would likely have a better grasp on the numbers and trends as we transact through Level 2 and beyond.
But we would note that property is and has always been a long-term asset class and low interest rates matter more over the period of a 30-year loan than trying to buy a house for 100K less today, especially in the face of long-term asset inflation.
Eastern Bays' and Remuera's market statistics and general observations
Covering the real estate markets of Orakei, Mission Bay, Kohimarama, St Heliers, Glendowie, Remuera, Meadowbank, St Johns, Epsom and Mt Wellington
Note 1: Suburbs with less than 5 sales 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.
Note 3: Epsom’s statistics are provided for general reference for homeowners based in those areas and are not included in the overall “Eastern Bays & Remuera” numbers.
Trends in Orakei, Mission Bay, Kohimarama, St Heliers, Glendowie, Remuera, Meadowbank and St Johns real estate markets
Our properties in the Eastern Bays and Remuera have continued to receive a healthy level of inquiries and we were in a couple of multi-offer situations.
Listings continue to be very low, compared to the same time last year (down by around 50%). Good properties continue to receive the highest amount of interest, whereas we are seeing a slowing down of inquiries on higher-priced properties (especially for those which the large proportion of value lies in the land).
As mentioned, open home numbers remain healthy and buyers remain cautiously optimistic. Finding the right house for them remains crucial, although some are reporting facing delays in getting finance approved. As a result, we expect transaction cycles to be taking longer than usual.
In short, location and property type remain king. And a great, well-presented house in the Eastern Bays/Remuera will continue to prove attractive.
As such, it’s important to ignore all the media noise about ‘big declines’ in some part of New Zealand and an media commentator extrapolating those declines nationwide. Even in a booming market, you will always find exceptional sales, especially when some Council Values are over-inflated in the first place. These one-off sales do not in any way represent the true picture of the specific real estate markets in Orakei, Mission Bay, Kohimarama, St Heliers, Glendowie, Remuera, Meadowbank and St Johns. Different properties in different areas sell for different prices.
So Is Now A Good Time To...
So Is Now A Good Time To Sell In The Eastern Bays and Remuera?
It's All About The Supply!
We’ve discussed in previous occasions the demand/supply forces that are at work during this COVID-19 period.
In this month, we focus on one thing that’s an actual, irrefutable fact: LOW SUPPLY.
In any healthy market, there are opposing demand and supply forces. Buyer demand remains present, although there’s (unsurprisingly) some resistance and reluctance (especially for certain types of properties as discussed above). To be clear, we have not seen a complete disappearance of buyers as some media commentators would have you believe. After all, humans always need a roof over their head as a basic primal need and these needs do not change.
But after adjusting for the slight dropoff in buyer demand, the corresponding drop off in the number of properties available for sale is even steeper. This means there are way less properties on the market during this time compared to last year.
As a vendor and if you are thinking about selling, this should be fantastic news. Why?
- Your property is always in competition with others. With less competing properties, there are way more buyers looking at your property than in any other period. More buyers looking = more demand for your property.
- The shortage of supply also leads to motivated buyers having to compromise for a property that may be less than perfect, if they need to move. As mentioned, there are always motivated buyers (and we know quite a few of these) who must buy soon.
- Economists focus on the aggregate demand in the market (aka the ‘big picture’). As a vendor, you can’t control this, regardless of the market conditions. What you can control is your choice of agents, the marketing strategies they employ that are fit for today’s market and how you present your home.
Here’s our case study: 1/12 Shera Road in Remuera. We launched this double grammar zone property in the last week of Level 4 lockdown. We’ve racked up nearly 16,000 views on TradeMe alone. By way of comparison, any average property would top out at around 6,000 views throughout the entire campaign. We’ve taken over 50 enquiries on it in the 1st week alone, and continuing to receive at least 3 a day from very active buyers. Is that something not desirable for your property?
But in this market, make no mistake that we, as your representatives, need to work even harder on each and every buyer. The art of persuasion remains critical, and being able to speak to them in their native language and understanding their needs and motivations can have huge implications on your sale price (or even a sale at all).
Asian buyers remain very active in hunting for the right properties, knowing and understanding the value of location and property well in the current era of fluctuating prices in other asset classes like stocks. To provide some cultural context, the Chinese word for “crisis” is “危机”. 危 = danger. And 机 = opportunity. That should tell you a lot about the mindset of this particularly large group of buyers who is starting to become even more active in the Eastern Bays for its good school zones and beach lifestyle.
So what should you do?
- If you are thinking whether should you sell or should you wait, here’s a fundamental truth – if you are selling and buying in the same market, you will be fine. In fact, if you are upgrading in this market, it is even beneficial for you because of the ‘trade-up premium‘. For example, if the current house you are selling is $1M and the next house you are buying is $1.5M. A 10% drop across the property market would mean that the house you are currently selling is $900K and the house you are looking to buy is $1,35M, and so you just made $50K (difference between $500K then and $450K now) thanks to the market. A winner? We sure think so.
- We also strongly believe in the first-mover advantage. You must be first and well-positioned to catch the wave of pent-up buyer demand. (Or if you believe that the market is declining, then you need to catch the last of motivated buyers before a glut of properties hits the market.)
- Think about your life plans, and act accordingly. This recovery process may be long drawn (or it could be sharp, who knows?) and it could be years before we see the economy picking back up as businesses will be wary of taking on new employees and increasing expenditure as everyone will remain wary of having to go back into lockdown. This means consumers and businesses will want to build up extra savings in case of the same thing happening again, until a vaccine is successfully developed. So if you can’t wait for long or if you are now on your mortgage holiday and may not be able to continue once that’s over, then perhaps now is the best time to act.
- Don’t try to time the market and hope for the best. Focus on choosing the best agents who can market it using modern and unique marketing strategies which will be especially attractive in this age as people spend more time at home in front of their digital screens and only visit the properties which they are serious about. Think Facebook Live videos, targeted digital marketing, live virtual tours of your property and the use of video to meet with potential buyers etc. Make sure your preferred agent can adapt and keep up with the latest technologies to snare that buyer.
- Know that it’s business as usual for us. We have been operating remotely and used digital marketing strategies since our inception, so are very well-versed and adept at advertising properties online. What’s new to others is routine for us. Our ability to reach your buyers when they are at home has not diminished, and has in fact increased. Our website traffic has tripled during this period. In fact, given that many buyers are stuck at home, this is the best time to leverage social media and online platforms to get in front of them. Check out our 24/7 Live Chat at the bottom left corner – buyers today want instant gratification and answers and we are here to deliver it to them on your behalf for free. And frankly, we love the Live Chat as we interact with buyers in real time.
So Is Now A Good Time To Buy In The Eastern Bays and Remuera?
It really depends on your personal circumstances. This whole Covid-19 pandemic has not affected everyone equally. While some have lost their job, others are incredibly busy. These are people in the medical field, IT industry and food delivery services (like My Food Bag). They are seeing an spectacular increase in their business turnover and revenues. Like any point in the economic cycle, there are winners and losers.
So if you think that your job/business is relatively secure, then this is the perfect storm to buy in. Just like those people who have bought during the GFC and are enjoying the gains right now, this may now the opportunity for you to grab with both hands.
If you are thinking about waiting, let’s just say you are not alone. But is there really ‘safety in numbers’, or would you prefer to face the greater competition when everyone chooses to come out and buy at the same time (aka boom)? Those who are hoping to grab a bargain are likely going to be disappointed with low stock levels at the moment, low interest rates and a low level of motivated vendors who will sell at any price. And you may face a double whammy when the house you like is sold to someone else, and you have to compromise to get something you like less AND perhaps pay more.
In short, if you have a house you like and can afford, make a reasonable offer considering the circumstances today. You just may get that offer accepted and enjoy life in your new place. And surely there’s an actual intangible benefit to that.
If there’s one thing you can control, that’s interest rates. Record low interest rates over the course of your mortgage will mean you will likely save more, compared to the purchase price.
Are you going to wait around for a market correction that may or may not come (some of the best buys we’ve seen were made last year during this lull period), or take full advantage of the lesser competition and low interest rates?
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Found this post useful and have more questions?
We have detailed statistics at my fingertips, including recent sales within the Eastern Bays and Central Auckland suburbs, so do not hesitate to contact us for a no-obligation discussion over coffee on your future plans to either buy or sell.