Property Report: What the industry says

By As told to Graham Hepburn

Mike Bayley
Managing director
Bayleys Corporation

Sales volumes in the residential property markets throughout January always tend to drop off their previous end-of-year highs, and the start of 2016 has seen this pattern continue.

A large percentage of Aucklanders were away on holiday, with the market returning to some semblance of healthy activity only from February on.

For the greater Auckland residential property market, the first three quarters of 2015 were frenetic. In the coming months, we're forecasting the market will continue to take a deep breath from that period to reflect on breakneck capital growth levels, and assess "where to" from here.

Budding home owners will lead the crusade back into the market, ahead of investors. Just how far behind the investors are in terms of returning in any large numbers, is the big uncertainty. Rental yields are now generally below 3 per cent in Auckland, and capital growth rates are more likely to look like bank term deposits at best rather than the double-digit increments seen in 2014 and 2015.

Anecdotally, we are hearing that some seasoned Auckland property investors have broadened their radar to the adjacent province of Bay of Plenty, Waikato, and Northland. Prices for houses in those areas have increased accordingly -- with greater demand driving up values.

The drivers of the residential property market from an owner/occupier perspective -- net migration numbers, low interest rates and high employment levels -- remain largely unchanged. Accordingly, they are underpinning current values and should continue to for the foreseeable future.

Chris Kennedy
Chief executive officer
Harcourts

Despite talk of an easing-off in the residential property market, sales and prices continue to rise.

In January there was a 13.2 per cent increase in residential property sales across the country as compared to January 2015. The average house price across the country also rose by 8 per cent to $488,078.

Of some concern is the 24.5 per cent drop in the number of properties available nationally. This is a result of high demand and insufficient new builds, and means prices will continue to rise. Prices have jumped in all the regions, with the central North Island showing the largest increase at 24 per cent. The average home now sells for $400,041.

The number of properties available to buy in the central North Island has also decreased over the past 12 months. There are now 40.5 per cent fewer properties available to buy than in 2015.

This is a direct result of Aucklanders looking to find better affordability elsewhere, as our largest city's property market shows no signs of slowing down. The average price in Auckland and Northland now sits at $801,662, up 17 per cent on the same period in 2015. Residential properties available to buy are down by 10.8 per cent. Wellington is experiencing the same low levels of stock, with just 941 properties available to buy as opposed to 1536 in January 2015, a 38.7 per cent drop.

Across the country, demand is high and supply is low, which means we can expect a buoyant property market for some time to come.

Graeme Fraser
Head of agency operations
Ray White

The latter part of 2015, together with the early part of 2016, has seen a slight change in market conditions; with prices holding at similar levels, while inventory and available listings continue to lower. This would indicate fewer properties coming to the market and this will, in turn, potentially, cause further competition for buyers, which may see price increases returning in the second quarter of 2016. Sales currently are in a positive mode, with the majority of properties selling during their marketing period.

The introduction by the Reserve Bank of foreign investor requirements has seen the investment category of property slow down from the previous record levels seen this time last year. Generally, owner-occupied properties remain strong and, given there is a further expectation of interest rate reductions during 2016, we believe the market will continue to attract buyers when linked with record immigration numbers moving into the main CBD markets. The onflow effect on sales in Auckland, Wellington and Canterbury has seen a certain number of buyers look for value in the regional areas and many regional areas have reported record number of sales, with positive price increases of up to 15 per cent.

The rental market is beginning to again show low vacancy rates and this may push the current average rental up by around 5 per cent during 2016. Other factors affecting the market continue to be housing affordability, the release of Auckland's Unitary Plan, and areas that have been identified for additional housing.

Peter Thompson
Managing director
Barfoot & Thompson

The factor that will most influence Auckland residential sales in coming months will be the number of homes listed for sale.

While new listings in the first few months of 2016 were in line with those in the past few years, stock of homes for sale at the start of February, at 2600, was at its lowest for any month for 20 years.

Despite all the efforts of government, council and developers, the number of properties built in 2015 did not keep pace with population growth.

The facts are that for the past three years the average house sales price increased by 11 per cent, 10 per cent and last year 14 per cent. In January, the last date for which data is available, the year-on-year average price increase was 7 per cent.

Throughout 2014 and 2015 there were those who said prices could not continue to rise -- but they did, demonstrating that trying to pick the top of the price cycle is as elusive as ever.

Given that the majority buy a home to live in long-term, for me the most important consideration is an individual's ability to meet mortgage repayments over coming years.

At present, mortgage interest rates are at all-time lows, and there is a strong belief in financial circles that with inflation at a 20-year low interest rates may soon be cut further.

If mortgage payments can be met, time will take care of price.

Keith Niederer
General manager
LJ Hooker and Harveys Group

Immigration and continuing low interest rates, along with more buyers than properties for sale, will ensure a firm market ahead for 2016, not just in Auckland but across the nation.

Realestate.co.nz statistics show the national inventory in January 2016 hit an all-time low of 14.7 weeks. The previous all-time low was 16.1 weeks, set in October 2015.

Aucklanders will continue to look for greener pastures in the provinces -- where properties are more affordable and traffic more tolerable. Many of the regions have, after a long period of time, started to see capital gain as the Auckland influence flows into the regions.

Personally, I believe capital gain will be subdued in Auckland. If there was to be any big gains this would be driven by overseas money. The outlying areas of Auckland such as Pukekohe, Waiuku, Tuakau, Pokeno, Warkworth, Kumeu, Huapai and Helensville will continue to be a happy hunting ground for first home buyers and families looking to get away from the hustle and bustle. Petrol prices, like interest rates, are at an all-time low and this will save families at the pump as well.

Rental accommodation will be at a premium in all areas with landlords looking to cover their costs so rent reviews will continue to be on the cards. No price marketing will continue to be favoured by vendors, simply because pricing a property in today's market is just about impossible. Over the past few years many vendors who have sold by auction or set sale date have been pleasantly surprised.

Barry Thom and Grant Lynch
Owners Unlimited Potential

The year has started with a whimper rather than a bang. Media reports of a softening market here definitely impacted buyers who are resolved to paying less. At the time of writing, however, homeowners are not convinced and are holding out for their price.

Consequently, the selling cycle in some cases is protracted as the parties try to find a meeting of the minds in a market place that has had some mixed signals.

Special properties -- those properties that tick all the boxes -- are still being competed for hard and selling in some cases at the premiums we have seen over the last year.

While record low interest rates continue to encourage buyers, we are noting a much higher number of the retiring baby boomers looking to buy a "nice little renter" as the answer to the diminished return on money in the bank.

Our observation is that some first home and retirement buyers are looking out of town in the hope that their capital will take them further.

This emerging market, alongside what we are observing as the return of the overseas/Asian buyer, may help to underpin the market going forward.

While migration continues at record levels and the demand/supply ratio remains unchecked, we would expect things to be steady as she goes. The dark clouds of a stalled economy and the impact of an international economic meltdown remain reasons why confidence should be more circumspect.

- NZ Herald

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