Barfoot & Thompson chief Peter Thompson notes slow residential house price growth in the Auckland market in 2018 but expects much the same in the year ahead and says there is a chance of a slight market correction.
Q: What is 2019 looking like for your business?
A: 2019 is going to see a continuation of good property sales being made with house prices remaining similar to what they are currently. There is a chance we could see a slight market correction as it is becoming more of a buyers' market compared to this time last year.
Days on market is lengthening and more sales are conditional on getting finance from banks. Open homes numbers are fewer in the past month but indications from our people are that those attending have done their homework and are interested in buying, However with a strong economy still in demand, interest rates remaining low, building consents slowly increasing and development of new apartment blocks and new projects coming on to the market, choice is the word at this time. Technology is advancing but the people who provide a service will still be the key to our business
Q: How is that different to 2018? How has the last year been for your business?
A: This past year has been very successful for Barfoot & Thompson, seeing an increase in the number of sales, number of properties we manage for landlords, more instructions from body corporates for our body corporate sector to manage and with the Unitary Plan taking force, our projects team seeing some projects that were launched in the past year or two being completed and new ones coming onto the market. All this culminated in the last couple of weeks being named Best Real Estate Agency in the World at the recent International Property Awards
2018 has seen more sales being made than in 2017. Prices continue to increase though only by around 1 to 2 per cent over the whole year.
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Since October 22 with amendments to the Overseas Investment Act coming into effect, listings are becoming fewer. Buyers have more choice and are doing more homework on what is on the market and unless vendors price their property right, it will remain on the market longer. More private landlords have instructed our agency to manage their properties for them as new legislative requirements are pushing more demands on the landlord and they just want us to take that issue away from them and leave us to manage their rental.
Q: What are the issues affecting your industry in the next 12 months?
A: Recent legislative changes are going to impact the market with both the Overseas Investment Bill coming into effect and from January 1: the Anti-Money Laundering and Countering Financing of Terrorism Amendment Act
Legislative changes will throw up new challenges to vendors and purchasers but as we have seen in other countries, these have settled down after six months once people, including agents, have adapted
Being a member of Leading Real Estate Companies of the World, we attend overseas conferences and symposiums and the feeling in most countries is the fact people can't now buy in New Zealand full-stop, which is not the case.
Yes it has tightened up, and most would agree this was needed, but the Government needs to ensure the message is got out around the world that people can still invest in New Zealand, and explain what they can invest in and how to go about it. This will have an impact on much-needed people with skills like the building sector, health and education to name a few from coming to our country.
Q: What is the biggest issue you would like the Government to champion in 2019?
A: The year will see the review of the Residential Tenancies Act and this needs careful consideration. While there is talk of changes to benefit the tenants more, the Government has to ensure equal protection for the landlords otherwise we may see landlords quit their property and invest elsewhere.
This would see a reduction in investment property for rent, create a supply issue and rents would go up and again make it harder on the tenant. Tenancy tribunals need to be revised to ensure a quicker and fairer outcome for tenants and landlords. Stop introducing new legislation without working through all the issues before introducing it. Talk to the people at the coalface of the business and see what the impacts will come from these changes.
Many of these changes are having a huge cost to the business and while we carry these costs, we may not be in the future if they keep going up. If we look at the anti-money laundering bill, for example, there are the lawyers, real estate agents and banks often doing the same thing for vendors/purchasers and all having to pay for the costs of doing such checks. While we all agree on the need for protection of our country and ensure we maintain the high security standards we have, there must be a way of having a centralised database, for instance, that all three parties could work through.
A review of the Resource Management Act is needed if the Government is to look at making homes more affordable. Similarly, councils need to limit the number of consent costs they charge on renovations or new buildings. Again, these costs have escalated over the years and when you add these all up, you can understand why prices are going up.
Q: Do you get a break this summer? What's your favourite way to relax?
A: Due to our beach house on the Coromandel currently getting rebuilt, my wife and I plan to be around Auckland this Christmas with our family. We will go to the races on Boxing Day, go out on our boat when the weather permits, but I also need to be around for work with the introduction of the new anti-money laundering bill and assist our team where needed. Still a lot of unanswered questions and unknown processes. I hear Auckland is quiet over the Christmas/New Year period so I hope to read a book or two as well and laze by the pool.