Short commentary on Eastern Suburbs' real estate market statistics for January 2020
The real estate market has roared back to life – with the highest number of listings in Auckland in the same month for the last 4 years.
Our properties are selling, and selling fast – either under the hammer at a pre-auction offer or one week after it goes on the market. So the old adage that the January period would be a quiet month for real estate sales does not ring true at all. In fact, many of our clients took our advice of the first-mover advantage and saw phenomenal numbers come through their properties at a time when the stock is limited and the motivated buyers are out there hunting.
The coronavirus epidemic around the world is obviously causing a bit of concern. And as we head into autumn after what is expected to be a strong summer, we have obvious economic headwinds. However, the low interest-rate environment has been very conducive for mortgage borrowing and we are seeing increasing numbers of mum-and-dad investors (who have been shut out for the past 3 years) returning into the action.
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 January 2020
Compared to December 2019
Compared to January 2019
- Median price down 1.2%
- Sales count down 33.0%
- Days to sell decreased by 3 days
- Median price up 8.7%
- Sales count up 9.7%
- Days to sell decreased by 8 days
Auckland market as a whole
In Auckland, median house prices increased by 8.7% to $875,000 – up from $805,000 at the same time last year.
These results are in line with the REINZ House Price Index (HPI) which saw property values in Auckland increase 4.4% annually. The Auckland HPI increased by 4.4% year-on-year to 2,918 – the highest annual percentage increase in 33 months. It’s also the third positive annual increase in a row after 13 months of negative results.
Auckland saw the median number of days to sell a property fall by 8 days from 51 to 43 year-on-year – the lowest days to sell for the month of January in 3 years. This means properties are selling faster!
For the first time in 24 months, Auckland had the highest percentage of sales by auction across the country with 15.0% (or 194
properties) in the region sold under the hammer – up from 7.2% (85 properties) in January 2019. The heated bidding at auctions and the return of buyer confidence has been pretty evident to us.
On the ‘positive’ news front, the continued migration into the country, low unemployment rate and a relatively stable economy should remain supportive of increasing house prices.
However, it remains open as to how long this activity can continue. The coronavirus is on the horizon and some export businesses are hunkering down.
Also, fixed mortgage rates may increase at some stage in 2020, plus the capital ratio requirements on banks to keep more cash in reserve in the later half of 2020 could force them to hike interest rates or reduce their lending to all but the best customers. If that happens, expect the property market to cool down – mortgage lending is the lifeblood of the property market.
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 and Mount Wellington’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
We have been receiving a lot more enquiries on all our properties, with increased buyer urgency. On a very ‘unscientific’ basis, buyers are picking up our phones and sounding chirpier and more willing to put in offers/pre-auction offers.
FOMO seems to be back, especially for houses below the $2 million range. We had 160 groups through a property which we recently sold for 210K above CV.
Our different types of properties – from do-ups to brand new builds – are getting an increased amount of overall buyer interest, with the bulk of queries being from homeowners looking to upgrade or first-home buyers rather than investors.
So Is Now A Good Time To...
So Is Now A Good Time To Sell In The Eastern Bays and Remuera?
What's The Coronavirus Going To Do?
We have not seen or heard much feedback from buyers on this point (other than one group who were wearing masks at our open homes). As mentioned above, buyer confidence remains intact and we have not had any buyers who pulled out of any offer or auction and citing job insecurities or the coronavirus as the reason. It could be that these buyers have already received pre-approvals much earlier and see no reason to put their plans on hold.
But it may be too early to say. The Reserve Bank of New Zealand has kept the Official Cash Rate at 1%, the level it’s now been at since August 2019 and is indicating that it has now done with further rate cuts – unless the impacts of the coronavirus prove more long lasting than the RBNZ currently anticipates. Westpac is still standing by its prediction of a 10% house price increase for 2020.
For the offshore buyers, the ‘foreign buyer ban‘ and the offshore capital controls continue to have a much bigger impact. Offshore inquiries (i.e. buyers buying sight unseen) are still at very low levels. However, there’s certainly renewed buyer interest from the Chinese (who could well be local Chinese) as they generally view real estate in New Zealand as safe investments (especially after the coronavirus). There’s even chatter (although we think it’s unlikely) that there will be an influx of Chinese buyers into New Zealand not unlike a doomsday scenario – once the curfew is lifted. Certainly, the fact that New Zealand (for now) remains ‘uninfected’ is something that the Chinese is taking note of and can appreciate positively.
Do we think price growth will continue? Quite possibly, yes. Interest rate rises are quite distant – earliest talk is next year. Wages growth has accelerated. Construction growth remains strong but the factory shutdowns and supply chain disruptions, along with reduced demand from NZ’s biggest trading partner, associated with the Coronavirus may hit NZ shores sooner rather than later.
So Is Now A Good Time To Buy In The Eastern Bays and Remuera?
As a buyer, you might be thinking, oh dear, the market is heating up, I should wait for the next low period.
However, have you considered that when the market was falling, you were also waiting for it to be at the bottom of the pit?
Here’s the truth. It is difficult or near impossible to time the perfect time to buy real estate.
However, if you have saved hard for the deposit, and you find a house that you like, and your bank is also willing to lend you, then you should go ahead and buy if your finances permit! Real estate is about how long you hold onto it, and not when you buy into the market. Sure, you might buy a little higher than a couple of months ago, but who knows when the next low period will come along?
In the meantime, are you going to stay in your current house and feel miserable? Or pay rent continously till the market corrects again? By then, you might have paid more than enough rent for the difference anyway. And there are certainly intangibles to owning (as opposed to renting) your own home that cannot be quantified by money.
So we always like to say, act now. Not because we are real estate agents, but because we are also buyers and the best time to buy is when you are ready.
Of course, in terms of the market, we are not at the peak of it yet so yes, definitely, go ahead and start shopping! Call your mortgage brokers today. Houses are selling faster – so better to not regret and miss out on your dream home. A few of these which we are selling only come on the market once in a few decades…
Good luck with your new purchase.
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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.