Operating in what is undoubtedly a sellers’ market, the leaders of the country's largest real estate agencies say there are no easy answers to the supply problems of New Zealand's major cities.
Mike Bayley, managing director, Bayleys Corporation:
For the first time since the Global Financial Crisis struck in 2008, the residential property cycle has returned to some degree of trend normality. That is to say we have seen large listing and sale volumes over the summer months of December through to March, with a tailing off of activity in autumn.
The frustrated buyer log jam which has built up over several years, compounded by low levels of new build housing supply stock and buying capacity fuelled by historically low mortgage interest rates, have all combined to see residential property prices surge in the Greater Auckland region.
The effects of this rise are yet to gather similar momentum in the provincial cities, Christchurch excluded. Our figures at Bayleys show that Auckland and Canterbury combined accounted for some 90 per cent of the increase to the national median price of houses in New Zealand in the year to April 2013.
While the sales volume of properties through our Auckland branches was substantially up year-on-year in April, the comparison between March and April volumes shows that the turnover peak coincided with the end of summer.
A lot of debate has been generated by the Auckland Unitary Plan and its proposals for housing intensification within existing metropolitan urban limits and the establishment of council/Government accord for the freeing up of new subdivision land.
We are forecasting pricing levels to remain relatively stable throughout the remainder of autumn and into winter - with the supply and demand curve being offset by the dwindling availability of stock coming on to the market.
With the Government now mid-term, the drought factored into wider economic activity, and employment on the rise, a comparative air of financial calmness is blanketing the country. This bodes well for the psyche of home buyers and investors seeking stability. The big issue in the coming months, though, will be tight stock levels.
Peter Thompson, managing director, Barfoot & Thompson:
There are no short-term answers to Auckland's current housing shortage. The city has an unbalanced market caused by years of under-investment in new house building and, as a result of a growing population, more people than in the past are seeking to buy properties.
The number of homes that are coming to market and the level of sales are in line with activity in past years, but what we have is a situation where there are far more buyers than homes for sale.
It is not property speculators or non-resident buyers who are dominating the market. Based on our sales, seven out of ten houses are being bought by people who will live in the home.
While there have been some recent moves by the Reserve Bank that will ultimately lead to buyers needing higher deposits as well as announcements in the Budget aimed at freeing up land and speeding up building, they will not have an immediate impact on property sales. A bigger short-term impact will come from the traditional slow-down in activity caused by moving into winter.
In the next three months, prices are likely to hold around current levels.The key to selling and buying in the current market is to combine the expertise of a local agent with the information readily available from online services. What a local agent can do is add to the online information by highlighting the significant variation in prices that occurs from suburb to suburb, and within pockets within suburbs.
Local agents are aware of properties that are in the process of coming to market, the location of supporting local services that turn a house in a suburb into a home in a community, and what plans there are for the area.
Carey Smith, NZ chief executive, Ray White Real Estate:
The real estate market continues to provide sellers with confidence, with heightened activity compared to the same period in 2012. Seller confidence has seen prices continually rise, particularly in Auckland and Canterbury. These price increases have been supported through fewer properties being offered to buyers and also days on market continuing to lower to a level of less than 30 days in the main CBD areas.
According to the Reserve Bank, interest rates will remain at the same level for the balance of 2013 and potentially for the first quarter of 2014, giving further assurances to home buyers.
There were 29,405 residential sales in the first four months of 2013. This would indicate there will be approximately 100,000 sales for 2013 if the market continues along the same trend line. The number of sales will be determined by the number of properties coming on to the market. While the winter period traditionally sees fewer properties marketed, this year we believe the number may increase given the good prices being achieved for sellers.
The average sale price in Auckland is just below its highest level of $555,000, which is an eight per cent increase on the prices in 2012. The highest-priced region in Auckland, with a median price of $694,000, is the North Shore followed by Auckland Central which has an average sale price of $670,000. Across New Zealand, the average sale price is now $390,000 which is a more modest increase of three per cent.
The outlook will continue to see strong demand for property, particularly in the Auckland region. Buyers are starting to look further afield to seek value. While confidence will remain strong in the main areas, median price and sales volumes may begin to trend upwards for many provincial areas.
Keith Niederer, chief executive officer, LJ Hooker and Harveys Group:
The Auckland market continues to rise, with a steady supply of listings coming to the market. Bringing your property to the market during June, July, and August is the ideal time to sell as there are more buyers than property for sale. Auctions are becoming more popular, as the market sets the price and prospective purchasers compete to own.
Auckland rates and insurance costs are rising and the cost of living is taking its toll on many Auckland families. Many homeowners will take advantage of the higher prices and the vendors' market, with areas on the fringe of Auckland, such as Pukekohe, Helensville, Whangaparaoa and Warkworth benefitting from families moving to these more affordable locations.
Many retirees are also on the move, selling in Auckland atgood prices and buying in regional towns such as Matamata, Morrinsville, Cambridge, Whangarei and Thames.
First-home buyers will continue to be active, with parents becoming more involved financially in purchasing their children's first homes, helping with the deposit or using equity in the family home.
With petrol prices set to increase yet again in July the cost of building a home will also increase, with council compliance costs and building materials, also going up. With interest rates, it's a wait and see situation. They may go down due to the high dollar.
Rents will continue to rise as landlords need to recover costs of rates and insurance. Some landlords are taking advantage of strong prices and are selling some of their portfolio to increase equity and lessen risk.
Auckland's Unitary Plan tells us traffic congestion is here to stay, with residential apartment blocks and more intensification across the city in the years to come.
Hayden Duncan, chief executive officer, Harcourts Group:
Housing affordability and supply continue to dominate media headlines and political discussions, however national results from Harcourts show we are in a two-paced real estate market.
Auckland and Christchurch continue to see increasing house values off the back of limited supply, but provincial New Zealand and Wellington are consistently experiencing flat to low increases in values and volumes.
Attempting to slow the Auckland and Christchurch markets with wide-sweeping measures, such as restrictions on high loan to value lending, could be catastrophic for other markets throughout New Zealand that are experiencing a cautious, fragile recovery.
The only solution to rising house prices in Auckland and Christchurch is to increase supply. Politicians and local government need to stop talking and start providing real solutions for our two largest cities.
Auckland figures show the housing shortage is deepening, with new stock to the market down on the same month last year. Some owners are choosing to stay where they are rather than risk selling and struggling to re-purchase in a highly competitive market.
In Christchurch the rebuild does not seem to be even close to keeping up with the demand for accommodation.
The central region is seeing a fragile and slow recovery with increased values and volumes both showing signs of confidence returning. Wellington, Hawkes Bay and Taranaki are seeing promising signs, but there seems to be no pressure to increase prices. Job-market confidence in Wellington still seems low, however stock continues to drop and will put pressure on supply and demand factors soon. The southern region remains the most balanced, being neither a buyers' nor a sellers' market.