Property Report: What the industry says

Real estate industry heads remark on strong buyer confidence and a consequent increase in sales in the final quarter of this year. As for 2013, it looks likely to be more of the same, they tell Gill South.

Auction seems to be the favourite mode of selling in the current market, with vendors seeing auctions as the best way to maximise sale prices. Photo / Brett Phibbs
Auction seems to be the favourite mode of selling in the current market, with vendors seeing auctions as the best way to maximise sale prices. Photo / Brett Phibbs

Peter Thompson
managing director Barfoot & Thompson

While the housing market will reach the end of the year on full throttle, the outlook for the first quarter of 2013 needs to be viewed with a small amount of caution. The run-in to the year-end will be excellent, with demand remaining strong and prices staying close to the record levels established in October.

The demand for property remains greater than available listings and activity at auctions remains buoyant. Inevitably, the Christmas and summer break will take some intensity out of the market and it is not a given that the market conditions we have experienced in the last half of 2012, will be the start point for 2013.

In the New Year, activity will be strong, but modest short- term price fluctuations regularly occur at the beginning of a year. In the medium-term, there appears to be no quick fix to the need to build 10,000 new homes in Auckland each year to keep pace with the natural population growth of the city. While this lack of new builds continues, and with home mortgage rates remaining at low levels, there will keen interest among buyers for well-presented properties that are priced to market.

On that basis, the early part of 2013 will remain an active market. Currently, with our average selling price being in the high $500,000s, and the focus on the number of homes now selling for more than $1 million, the affordability of Auckland housing is a topic of debate. Past action says that when the public feels prices have moved ahead of value, turnover falls rather than prices retreating. This gives confidence to those buying at today's values, that in the medium-term their investment in property is sound. It is worth noting that in any given month close to half of all the homes sold in Auckland sell for under $500,000.

Mike Bayley
managing director Bayleys Corporation

Heading into summer, we are seeing the residential property market react as it traditionally does. Prices are up in all brackets across Auckland and listing volumes are rising rapidly as we come into summer. In Auckland at least, this activity has been simmering for some time over the winter period as low stock levels curtailed the buying options of purchasers wishing to take advantage of low interest rates.

Hamilton, Tauranga, Gisborne and Napier, meanwhile, are all noticing a renewed interest in residential real estate with lifts in both listing volumes and prices since the end of October.

While listing numbers in Auckland are showing huge increases, these percentages must be tempered with two important considerations. Firstly, as mentioned, the market is coming out of its winter cycle, when sales volumes are traditionally at their lowest.

And secondly, from a year-on-year perspective, we are still coming out of a recessionary dip when activity has come off some pretty low trading statistics.

Looking ahead over the short-term, property activity in the cities tends to fall off substantially from around the week before Christmas until two weeks into the New Year, as a large proportion of the urban population heads away for the holiday period.

Looking ahead to the first quarter of 2013 with the New Zealand economy now relatively stable, the residential property market should once again fall into its historical summer trading pattern. We are forecasting prices to continue rising, albeit slightly slower in Auckland as more stock becomes available, with regional centres starting to catch up.

In the medium-term, while the residential property market is showing increasing buoyancy, it is now a matter of sustaining a healthy level of both listings and prices. Few in the real estate market want another 'boom/bust cycle' as the one we had from 2005 to 2010.

Carey Smith
NZ chief executive Ray White Real Estate

Sales figures for the past quarter are up 30 per cent on last year and sale prices in many areas have also continued to show moderate lifts in percentage terms. The relative number of new properties coming on to the market has shown a steady increase in many areas across Auckland and this has meant that buyers now have a slightly better selection than in the previous quarter. There is, however, a strong demand for many areas across the main city areas and this has seen prices rise and a continued reduction in the days a property is on the market.

One key reason we continue to see record sales is the continuing effect of Christchurch and its rebuild. When this is linked with consistently low interest rates, there is a high level of movement in the property market.

Two other factors influencing potential price increases are the lower number of properties on the market and also many properties are now being marketed by auction. Across New Zealand, average sale prices for Ray White have increased by 4.5 per cent, with the highest increases being experienced in Auckland through the city-fringe suburbs, where increases as high as 20 per cent have been recorded. The rental market is experiencing low supply levels and this has seen vacancy rates lower and rental prices increase across most CBD markets.

The next period will provide buyers with a greater selection of property and this may see some pressure come off prices but sales will continue to remain at a high level. The Reserve Bank has indicated interest rates will continue to remain at record low levels throughout 2013. This will give further stability to the property market and provide confidence for buyers in their decision- making process.

Hayden Duncan
chief executive officer Harcourts Group

With Harcourts' house prices continuing to rise 12.2 per cent nationally, buyers still hang in hope of relief, but frustrations grow as the Government fails to provide any real, detailed solution for them. Sixteen months ago Harcourts predicted a housing shortage crisis (6 July, 2011) and that prediction is now the headline of every major news outlet.

Harcourts' average house price in Auckland is now $573,529, which has resulted from our 37 per cent increase in auctions year-on-year. This strong and continued auction growth makes for a definite sellers' market. A rise in residential dwelling consents and a slight increase in listings in Auckland will not abate the supply versus demand issue. The monthly inventory of property on-hand sits at the fourth-lowest level for a decade.

In our view, the significant, long-term accommodation issue will continue pushing current values upwards; this is an issue not ready to go away.

Currently the biggest restriction on major housing projects in the required locations are local government costs, red tape and a lack of effective funding which is reducing any confidence significant-sized developers would have in the taking the risk. The Government could provide solutions for all of these issues and create jobs through various initiatives but its plans don't include any real solutions to date.

Around the rest of the country, momentum is evident, the central region is showing encouraging signs that the recovery in the region may be sustainable. Uncertainty still remains in the government sector job market in the capital and for that reason Wellington continues to remain relatively steady compared to other markets in New Zealand. House building in Canterbury is gathering pace, but not fast enough, resulting in prices being put under significant upward pressure.

Keith Niederer
chief executive officer
LJ Hooker and Harveys Group

We have no doubt that housing will continue to be favourable given the current interest rates and the long-term prospect of capital gain.

In Auckland, for instance, immigrants seem to have become more dominant in transactions within all price ranges, realising that property is a great investment and will be less affordable long term.

There has also been a shift within the Auckland market with homeowners 'downsizing' to free up capital and 'de-risk' themselves - some buying out of Auckland - opting for more coastal areas such as the Coromandel and Whangarei.

In our opinion, the Government will need to review subdivision regulations within Auckland and around the country to provide more housing for New Zealand's growing population. For instance, the Kumeu/Riverhead region is ripe for further residential development as the infrastructure is now in place, with the extension to the North Western motorway.

In future, I can sense a decrease in mortgagee sales as the mortgagor in many instances can sell their property at a higher price and avoid going to mortgagee sale. To sellers, I would say the marketing of your property is more important than the pricing. A wise vendor will invest in the marketing of possibly their biggest asset. Vendors need to keep their feet on the ground as far as price is concerned and to listen to their agent's regular market feedback to assist you in your decision making.

To buyers, make sure you do your homework. The days of buying conditionally, then waiting to sell your home, are numbered. If you see what you want, then you must buy it. If you wait it's often too late.

During 2013, the Auckland media will continue to be full of properties for sale by auction - there is no finer or fairer method.

- NZ Herald

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