April 2019 – Real Estate / Property Report for Orakei, Mission Bay, Kohimarama, St Heliers, Glendowie, Stonefields, Meadowbank, St Johns & Remuera

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. And I also cover thorny issues around high real estate commissions and the real value of appraisals below. Lots of tips below for sellers and buyers. 

So do read on…and leave a comment if you find it useful!

Contents

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

Ruoxi Wang - NZ Premium Homes - Real Estate Agent Orakei Remuera Kohimarama Glendowie St Heliers Mission 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.

 “I’ll just rent it out if it fails to sell.”

Some clients like to test the market – they have the holding power but it would be good to sell at a dream price point. If they do not sell, they will just take it off the property market and put it up for rent.

There are a few downsides to this approach which you should be aware before you embark on this route:

  • hassle and trouble, not to mention advertising costs. If you want to sell, you ought to give it your best shot.
  • stigma of being on the market – buyers will wonder what’s wrong with the place, even if you go on the market a few years later (these records are available, especially with a quick google search).
  • softness in the rental market presently – at this time of the year, with slowing immigration (revised) numbers, the rental market is soft and landlords are finding it hard to find great tenants. 
  • The recently passed Healthy Homes legislation also increases costs on landlords, and there is potential for further revision to the Residential Tenancies Act (currently under consultation) which could potentially remove no-fault evictions and strengthen tenants’ rights. Are you ready to be a landlord?

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’?

Ruoxi Wang - NZ Premium Homes - Real Estate Agent Orakei Remuera Kohimarama Glendowie St Heliers Mission Bay
All the above discussion about bank lending goes back to the point I’ve consistently made for the past few months. When selling in this market, your home in Glendowie, Mission Bay, Kohimarama, Orakei, Remuera or St Heliers really needs to be “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!

Ruoxi Wang - NZ Premium Homes - Real Estate Agent Orakei Remuera Kohimarama Glendowie St Heliers Mission Bay

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.”

Well, no.

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

Ruoxi Wang - NZ Premium Homes - Real Estate Agent Orakei Remuera Kohimarama Glendowie St Heliers Mission Bay

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).

Do Real Estate Agents Earn Undeserved High Commissions?

Many sellers often bemoan high commissions. And I can understand how you feel this way when you see us run a few open homes, make a few phone calls, set up an auction and pick up a pay cheque.

I thought it may help to shed some light as to why the commissions are the way they are, and the amount of work that goes ‘behind the scenes’ of a successful sale to earn that commission.

Regardless of what you think about real estate commissions, what doesn’t change is this: you absolutely need to carefully choose the right real estate agent to sell your precious home in Glendowie, Mission Bay, Kohimarama, Orakei, Remuera or St Heliers in order to get the best bang for your buck.

High Appraisals = High Price = Top Agent = Best Choice?

Lastly, for those who believe that a high appraisal guarantees a high price, well…you may really be in for a rude shock (to put it bluntly).

We do miss out on listings because other agents have provided a figure that’s, to put it bluntly, in ‘la-la land’, and have even thrown in free advertising (see below). 

And guess what? We are fine with losing such listings. 

In this industry, we get paid for selling your house successfully, and we get nothing if we don’t. Collecting listings which fail to sell do not pay. Selling them successfully do. 

Such over-appraising tactics invariably result in a lesser return for the vendor. We do need to get paid for our work and time, and we believe that our interest should always be aligned with yours.

The last thing we want to do is to spend all the time telling you, the vendor, that your property’s value has dropped by tens of $’000 or even hundreds of $’000 from the appraised price. You’ll feel deceived, and rightly so. We prefer to spend time working with your potential buyers who are not scared off by an overly-inflated price (which suggests an unrealistic or unmotivated vendor) and persuade them to make an offer on your property.

We also do not want to waste your time (and ours) by listing your home and then withdrawing it later because we are simply unable to achieve the ‘la-la land’ price.

You may think that’s fine and you can always re-list. But buyers who are attuned to the market often know even if the same house is re-listed with another agency or agent. Those who work with selling agents will also know from property records that the house has been on the market previously. And they will wonder what’s the problem and simply never show up to view.

The truth is this: Your property is worth what it’s worth in the current market.

We, as your real estate agents, are there to create competition on your home through unique and cutting-edge marketing strategies. And then we negotiate, from a position of strength thanks to the buyers’ competition which we have generated, to a level where the purchasers have committed to their top dollar and there’s nothing left to extract from them!

The decision to sell is then entirely up to you.

In my humble opinion, the qualities of great real estate agents are that of marketing expertise, honesty, efficiency, empathy, extremely skilled ‘selling skills’ and tenacity.

For agents who give unrealistic appraisals that are so far off the market, wouldn’t you agree that some of such qualities are clearly lacking?

Ruoxi Wang - NZ Premium Homes - Real Estate Agent Orakei Remuera Kohimarama Glendowie St Heliers Mission Bay

‘Free’ Marketing?

We also understand that some real estate agents / agencies operating in Remuera, St Heliers, Glendowie, Mission Bay, Kohimarama, Orakei, St Johns, Meadowbank, Stonefields or Glen Innes offer ‘free’ or ‘cheap’ marketing.

I get the psychology of loss aversion – that losses (i.e. upfront marketing expenses) are more painful psychologically compared to gains (i.e. extra $ earned because of strong marketing and negotiation). You may prefer not to spend upfront $ when selling – so if the agent is willing to provide free marketing, then there’s ‘nothing to lose’?

But think carefully. Is there really a ‘free lunch’ in this world? Do you really want to lose out on even more on your home simply because the real estate agent is pressuring you to sell the house at any price? He/she has already given you ‘free marketing’ (sometimes, such marketing is in reality free for e.g. the usual TradeMe). Will you not feel like you owe it to him/her to sell your house at that price because the ‘market has said so’?

This is known as the “law of reciprocity” – it basically says that when someone does something nice for you, you will have a deep-rooted psychological urge to do something nice in return. You may even reciprocate with a gesture far more generous than their original good deed. You can try and resist this law, but as a human, you will more than likely still feel that you need to respond in kind to a good deed. Ka-ching (for the real estate agent)!

You can’t sell a secret. Period. It costs money to run ads on these platforms, which explains why Google and Facebook are huge multi-billion dollar companies. It used to be the case that Facebook page followers matter. But that has now changed. Now, it’s ‘pay to play’ – if you don’t pay, Facebook will simply refuse to show the ad post.

What you should only care about is return on investment, and online advertising by far offers the best return on investment. For my vendors, I am transparent about marketing expenses – every single cent goes towards the advertising platforms (i.e. Facebook, Google etc) – and my aim is to always make sure you get the maximum exposure for your buck. It’s only right that I treat your money like how I would treat my own.

Buy In The Eastern Suburbs?

In today’s Auckland and the Eastern Bays/Remuera real estate market, there are many factors changing on a daily basis: prices; fees; mortgage rates.

All of these affect the price you ultimately pay for your property, so it’s easy to see why some people are unsure of what to do. But indecisiveness in this market can be costly.

If you’re looking to buy a property and you’re holding off on making that all important decision to buy, I can offer you 3 reasons why you should get down to it and make a decision sooner rather than later:

  1. Possibility of rising mortgage rates and/or no bank lending
  2. Risk of getting gazumped by another offer
  3. Possibility of your own house not selling
Ruoxi Wang - NZ Premium Homes - Real Estate Agent Orakei Remuera Kohimarama Glendowie St Heliers Mission Bay

In today’s Auckland and the Eastern Bays/Remuera real estate market, there are many factors changing on a daily basis: prices; fees; mortgage rates.

All of these affect the price you ultimately pay for your property, so it’s easy to see why some people are unsure of what to do. But indecisiveness in this market can be costly.

If you’re looking to buy a property and you’re holding off on making that all important decision to buy, I can offer you 3 reasons why you should get down to it and make a decision sooner rather than later:

  1. Possibility of rising mortgage rates and/or no bank lending
  2. Risk of getting gazumped by another offer
  3. Possibility of your own house not selling

Rising mortgage rates and/or no bank lending

Although we are in a low-interest rate environment today (and this is expected to stay for a while), things can turn quite quickly especially if the RBNZ’s capital proposals are adopted in their current form.

You will then suddenly see a reduced appetite in bank lending and find that interest rates rise as banks attempt to claw back profitability. Assuming you can get lending in the first place, such interest rate rises can mean an extra $100-$500 on your periodic mortgage repayments.

This in itself isn’t so bad, but more rises could mean your finances might take quite a hit. If you’re waiting on purchasing a property, for whatever reason, jumping in now could save you thousands of dollars in the long run. And your savings are not being eroded by the constantly decreasing term deposit rates.

Given the fierce competition in rates between major banks, mortgage rates have fallen below 4% for the 3 year tenor. This means borrowing costs are lower for many and buyers who are able to obtain a mortgage have more purchasing power. This is definitely a good time to be buying as borrowing costs are cheap! 

Risk of getting gazumped by another offer

We know of buyers who have made an offer on a property they loved, only to pull out of the sale to make an offer on another property that was a couple tens of thousand dollars cheaper. They were then gazumped on the cheaper property by a buyer who had offered several thousand dollars more. When they went back to the vendors of the first property, the vendors already had another buyer and were proceeding with them.

So the original buyers were faced with having to offer more money to get the second, “cheaper” property than they did on the first property, or to drop out of the sale completely. By this point, they had already paid out on solicitors fees and building inspections. Either way, they were more out of pocket than if they just stuck with the original property they made an offer on in the first place, especially when they were only tens of thousands apart (which amounted to approximately 1% of the property value).

Was the stress, anxiety and wasted fees worth it? Only those buyers can decide. Those higher fees may be the difference between you being able to buy or having to wait a little longer, by which time other factors may have come into play. This will push the cost of buying up even more!

Possibility of your own house not selling

For those who cannot afford to own two homes, you will face the perennial and difficult question: sell first or buy first?

I would now add that in this market, it is increasingly risky if you choose to not sell first. With lengthening time on the market and increasing stock, you run a risk that you will face a situation whereby you may be stuck with two houses, can’t get lending or have to take a substantial and unwelcome discount in the face of an only offer from an opportunistic buyer. This is probably what is contributing to high stock levels as vendors prefer to sell first.

What I would urge you, as a seller and a buyer, is to be realistic. Forget ‘record’ prices in the past or 2017 CVs (learn why CVs can be misleading here) – you just can’t go back to them. Just like you can’t buy Berkshire Hathaway (Warren Buffet’s company) stock at US$7,100 in 1990 (the Class A shares were even lower at its 1964 IPO price of $19!).

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Focus on your needs today. Remember that you are buying in the same market – when you sell at what you think is a discount, remember that you are likely to also be buying at a discount. So if you are determined to make a move for personal reasons, then make it happen.

Actively start looking at properties, put in reasonable offers and prepare to list your home on the market with the right agent. If you sell successfully now, when spring or summer comes, you will be in the right position to make strong offers as you are now a cashed-up buyer.

In short: if you’re in a position where you are about to purchase a property, make sure not to wait too long to make a decision.

Yes, buying a property is a big decision, but any delay in proceeding with a purchase may cost you a lot of money in the end. Found your dream property in the Eastern Bays or Remuera? Love it? Got the funding? Then by all means go for it!

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. 

Contact Ruoxi for a 10-min chat today!

Ruoxi Wang, Eastern Suburbs' Specialist, ray white, orakei, mission bay, kohimarama, st heliers, st johns, glendowie, top real estate agent, new zealand premium homes, nz premium homes
Disclaimer: Yes, I am a licensee salesperson under the REAA 2008, but I am not your salesperson and this article does not create any relationship between you and me (other than reader and author of course). All the information on this website is published in good faith, for general information purpose only and should not be seen as specific financial or investment advice. I do not make any warranties about the completeness, reliability and accuracy of this information. Any action you take upon the information you find on this website is strictly at your own risk. Copyright: The material contained in this website, including property information and images, may not be used in any way without the express permission of NZ Premium Homes or Ruoxi Wang.