Short commentary on Eastern Suburbs' real estate market statistics for January 2019
What a glorious (hot) summer we have been having! For those of us lucky enough, you might have only just come back from holiday.
For my Chinese clients, Happy Chinese New Year! 猪年大吉大利！祝福大家跑得更快更远更健康，新年发大财！
And to everyone, I hope you had a good Valentine’s Day celebration with your loved ones.
The Real Estate market also took its usual holiday breather (with School Holidays, Auckland Anniversary Day, Waitangi Day and Chinese New Year) and is slowly picking up steam over the past couple of weeks.
Let’s see how the popular Eastern Suburbs of Remuera, Kohimarama, Orakei, Mission Bay, Glendowie, St Heliers, Wai O Taiki Bay, Stonefields, St Johns and Meadowbank performed in January 2019.
If you are impatient (!), you can skip to the relevant sections:
Auckland's property market statistics for January 2019
Compared to December 2018
Compared to January 2018
- Median price down 7.3%
- Sales Count down 17.4%
- Days to Sell increased by 12 days
- Median price down 2.4%
- Sales Count down 2.8%
- Days to Sell increased by 6 days
The Real Estate Institute of New Zealand’s (REINZ) statistics for January 2019 demonstrate that the Auckland housing market remains stable with prices easing slightly. The REINZ House Price Index indicates that housing market value is down in Auckland by -2.1%.
However, what’s noteworthy is that it’s not the entire Auckland house prices that is falling. Auckland City actually saw an annual increase in its median price, showing that there are pockets of growth occurring across the wide Auckland region.
The numbers indicate that vendors are coming to terms with the fact that the market in general has moved in favour of buyers and are therefore adjusting their price expectations. Given the spectacular growth in the past 7 years, it isn’t surprising that some vendors are taking their profits now and moving on.
However, that does not mean that there will be a major correction in prices. In the absence of adverse economic factors, that is unlikely to happen. All it demonstrates is that the high premium in prices we used to see is no longer prevalent in the market.
Sales volume is also down, which is not at all unusual, given that January is the month where Kiwis head to the beach to cool off from the hot summer.
Median number of days to sell is the highest number of days to sell since February 2019.
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
Firstly, you’ll notice that St Heliers had an unusually high number of transactions in January 2019. This is likely due to the new development on Glen Atkinson Street (19 townhouses) which are now all SOLD OUT and expected to be built by late 2019. Ray White Remuera was the listing agency and the strong network of buyers across the entire team, coupled with an outstanding product, ensured that it was well received by the wider market. I’ve sold one to a lovely client of mine who is almost certain to make $ right from the get go. It’s indeed a fantastic buy!
Open home numbers are still strong in the Eastern Suburbs, especially for properties that are well presented. We are referring to properties with no major maintenance issues, and homeowners who have taken the time and effort to get the house cleaned, nice pictures taken and likely also paid for staging. These form part of top-notch marketing (especially digital) and can often make or break a sale.
Buyers are still out there looking, albeit more selective than in the past. As there is less ‘fear of missing out’ since buyers know that there is less risk prices will run away from them, they are not too worried if they miss out on any house as they know there will still be the next one available.
Another trend that we see is that offers are often made conditional. Clearly, buyers are not willing to fork out the amount to do due diligence if there is no guarantee that they will get the house. And the nervousness around sellers who have to sell before they buy, and with no guarantee of a sale, is leading to an increasingly common condition – the sale of their house.
But such conditions often weaken the offer and you will likely end up paying more. With increasing stock on the market, consider going out to the market first whilst looking for a house, especially if your house is desirable/popular (read more below).
So Is Now A Good Time To...
Sell In The Eastern Suburbs?
The type of houses that are extremely popular in the Eastern Suburbs are as follow:
- The quintessential family home on a full section that has at least 4 bedrooms, 2 bathrooms, space for a trampoline and maybe even a pool and that is well presented and in around the $2M price point. This is popular with families with a few children that are looking to upgrade to a bigger house that can accommodate everyone and their toys.
- A low maintenance modern townhouse with at least 3 bedrooms. These are popular with professional couples (especially first home buyers) who have less focus on maintaining a huge lawn or dealing with older houses.
- A 2-3 bedroom house that is single/double level, with easy-to-care-for garden and within walking distance to the beach. This is extremely appealing to buyers who are looking to downsize but still want to stay in the area. I’ve got at least 5 buyers looking for such homes.
If you happen to own any houses that fit these categories, then NOW can be a good time to sell – if you are thinking of moving. Demand for these type of houses is strong – in fact I have quite a few pre-approved clients who have asked me to find something for them because there’s simply not enough of such homes going around.
That being said, regardless of what type of property you own, in order to achieve the best possible price, you absolutely need modern marketing strategies to find the buyers. You just need one so you need to expand the ‘haystack’ to find the ‘needle’.
Buyers nowadays have their attention online and therefore that is where the bulk of your marketing should be spent on – not in print where readership is dying. And it’s not just about reach – it’s also about precise targeting.
Does your home have a tennis court and therefore suit a tennis aficionado? You can go Herald Homes/Property Press and spend money appealing to people looking for anything from 1 bedroom units to do-ups. Or you can choose the smarter option – spend less money and target tennis lovers on Facebook.
Another trend is that properties that are more suited to First Home Buyers (less than or around the 1 Million mark) are definitely still selling well. In fact, all our properties so far around that price mark have sold under the hammer.
Some have suggested that the easing of LVR restrictions may stimulate market growth but given the uncertainty around changes in tax regulations, anti-money laundering laws and rules around foreign ownership, this appears unlikely to be the wind in the sails.
Buy In The Eastern Suburbs?
I will put off buying – Australia’s property market is crashing so New Zealand will crash too?
Many people see New Zealand as a cousin to Australia and that what happens in Australia is likely to happen in New Zealand too. I can’t deny the possibility.
However, while we are geographically down under (weather’s better for sure), New Zealand’s housing market is not the same as Australia. As Tony Alexander (BNZ’s Chief Economist) emphasized, the “clear difference in housing markets is one reason why the NZ dollar traded above 96 Australian cents”.
Alexander cites 10 reasons for why we are not the same and I will briefly reproduce some key ones here:
- Australian Banks increased their interest rates as reflection of increased funding costs. However, New Zealand Banks have been at a “rates war” with mortgage interest rate being offered at 3.99% for two years
- Lending was much looser in Australia and therefore the subsequent tightening of lending as a result of the Royal Commission Inquiry drastically reduced the buyer pool. New Zealand never had that level of loose lending – although the Reserve Bank of New Zealand did have some issues with risk assessment.
- Lending rules have relaxed in New Zealand and therefore people with low equity (less than 20%) can purchase and investors only need 30% (instead of the previously 40% deposit).
- Australian households are even more invested (and thus indebted) in the housing market than Kiwis. There has also been a decline in spending and consumer sentiment which has not been observed in New Zealand.
- Australia’s major cities experienced a building boom and apartments popped up in great supply. In contrast, New Zealand does not have enough tradies to create that kind of supply quickly and is also limited by bureaucracy (or Kiwibuild).
What should you really do?
If you look very carefully and/or are willing to do some cosmetic works to the house, or basically fix issues, you can find some very good buys in the Eastern Suburbs.
In fact, the fear is that you as the buyer fail to act. I have seen a few buyers who think that because prices are stable, there is no real urgency to buy and therefore they can keep waiting for the right house to pop up. However, surely there is a huge opportunity cost (in terms of time, effort and disappointment) to keep going to open homes, spending money on legal due diligence and never ever making the right offer to buy the house.
Another situation which I’ve observed is buyers who go to auction, let properties pass in and now think they are now in the power to negotiate. But only to find that the property sells shortly after auction for a price they would have absolutely been willing to pay had they not been insistent on getting a bargain.
At the end of the day, we all want a good deal. Buyers are certainly benefiting from some bargains from motivated vendors. But these tend to be properties which do not appeal to the owner-occupier market and are often snapped up by those deal hunting investors left with good equity or borrowing capacity.
However, it is difficult to get the buy of the century or to time the absolute bottom of the market. Interest rates remain low and the latest indications from the Reserve Bank suggest that the Official Cash Rate will remain at current levels.
According to the Reserve Bank, a range of capacity-related constraints also mean that many construction firms cannot expand production enough to keep up with demand. This means that supply constraints will keep prices from crashing, absent an economic shock.
As long as the purchase is something that you are comfortable (both financially and emotionally) with and allows you to move on to the next step of living your life, then maybe that’s the best decision to make.
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.