The recovery of the housing market is much wished for by those in the property industry, but is it really happening in the early stages of 2012? What are the signs? Our industry heads give Gill South their honest take on the sector, which is, on the whole, cautiously optimistic.
Mike Bayley, managing director, Bayleys Real Estate
After two years of seeing 'false start' recoveries, affected by such events as the Christchurch earthquakes, the 2011 election, and the precarious state of the European Union, I'm reluctant to predict that a full-scale recovery mode has once again swung back into action.
The underlying factors of the residential housing market are still showing mixed signals. On the plus-side, the official cash rate is still at historic lows and the Reserve Bank is showing little appetite for any rises this year. New building consents are still at low levels - holding up demand for existing stock.
On the other side of the residential housing supply and demand equation though, immigration numbers are still at historical lows, while employment levels and general business confidence are both fragile.
What I can say is that 2012 has started off with far more positivity than a year ago. Listings and sales volumes are looking stronger in the key indicator Auckland market - and for the first time in a long while, that market has now branched out to the city's greater suburbs.
Previously, under the multiple 'false start' recovery scenarios we have noted, the positivity had been confined to the Auckland city fringe suburbs of Ponsonby, Herne Bay, Mt Eden, Parnell and Remuera. It could be this time that the recovery has already generated a sufficient groundswell to continue a momentum well into the second quarter of the year.
Our first big marketing initiative of the year, an auction campaign of more than 250 homes in Northland, Greater Auckland, Wellington and Christchurch, drew unprecedented support from vendors, and could reflect a willingness by the market to get things moving.
If it is, then I forecast it is only a matter of months until the ripples of positivity move out across the regional cities.
Hayden Duncan, chief executive officer, Harcourts New Zealand
Last year was a challenging one for New Zealand.
The Christchurch earthquake, together with the sinking of the Rena, placed the country under unprecedented pressure.
It was with much relief that the year ended on a positive note with our boys in black bringing the Webb Ellis Cup back to New Zealand plus a National-led Government voted in, in the November elections.
The property market ended positively with the final two quarters of 2011 showing growth in sales, with the last quarter reaching a 22 per cent year-on-year increase.
Looking ahead to 2012, Harcourts sees a brighter outlook for homeowners and investors.
We are witnessing strong activity resulting in settled sales volumes across the company. Auckland has been the catalyst for the majority of the increase, however following the Christchurch earthquake, unexpected activity has resulted throughout the region with people looking to secure undamaged homes.
The volume is being driven by easing and competitive lending criteria, while the main banks are competing strongly for the mortgage market share. This is allowing first-home buyers to purchase and therefore the first-home buyers from four to five years ago now have the ability to move up to their next home. Prices have seen some upward pressure, however not to the extent some were anticipating.
With a severe shortage of homes already in the main centres and no significant lift in new building consents, the competition for existing homes will, in time, drive prices up further. Our property investor clients are also going to see continued strength in rental prices with the same issues prevailing.
Carey Smith, NZ chief executive Ray White (Real Estate)The real estate market has shown a consistent upward trend in sales numbers for the last period, due to confidence from buyers thanks to consistently low interest rates and the potential to trade up.
There have also been fewer numbers of properties presented to the market and while buyers' expectations have remained consistent, in many areas of Auckland buyer demand is outstripping supply and that has in turn resulted in increased prices and reduced days
on market. The city-fringe area of Auckland has been particularly sought after by many buyers; resulting in above-average prices and many properties being put to auction and selling above expectations.
The investment market more broadly throughout New Zealand has also shown a marked increase. There is a rental shortage and this is enabling investors to have a more predictable return which, when linked with lower interest rates, makes property in the investment sector more attractive.
The outlook for the next period will see more properties coming on to the market over the March and April period. This will provide buyers with greater selection and may take some pressure off prices, but sales will continue to increase. The major cities, including Christchurch, are now trading at high levels of activity. Christchurch has recovered 80 per cent of its market activity and with the continuing movement of buyers in the Red Zone, will drive further sales from an extended buyer pool into the New Zealand market.
The indication from the Reserve Bank Governor Alan Bollard that interest rates are to remain at the current low level during 2012 will give further stability to the market and provide confidence for buyers in their lending and decision-making process.
Peter Thompson, managing director Barfoot & Thompson
The Auckland property market is progressively maturing into a self-contained one that responds to economic conditions which are separate from the rest of the country.
The key drivers of Auckland are population growth, job opportunities, a growing immigrant and expat community, and years of low levels of new-house builds.
This is contributing to house prices across the region growing modestly, turnover of houses being maintained at a steady level and high seasonal pressure on rental accommodation caused, in part, by university and language school students seeking accommodation.
The current trading environment is likely to remain throughout the first half of 2012.
Auckland's unique growth situation is also creating some specific trends worth noting.
For example, there is steady demand from buyers at the high end for homes valued in excess of $2 million, while the number of homes being sold for in excess of $1 million is rising.
Apartment-style living is becoming more popular, both within the central city and city fringes. It is a development recognised by the major supermarket chains, with a New World Metro recently opening on Queen St.
There is strong suburban growth on the limits of the city's boundaries, such as in Okura in the north and Flat Bush and Whitford to the south. These suburbs are close enough to work and transport corridor options, to be part of the commuter belt.
Meanwhile lifestyle properties in semi-rural areas which are close to the city, such as Pukekohe, Karaka and Rodney, are again becoming popular among those who want country living and the ability to enjoy the facilities and attractions offered by the city.
In combination, these trends represent a growing confidence that economic conditions are starting to improve; the stability the property sector has demonstrated in the past 12 to 18 months is on solid ground; and that, at today's prices, property represents good value.
Keith Niederer, general manager New Zealand LJ Hooker and Harveys Group
Real estate prices in New Zealand can only go one way with building prices doubling in the past 10 years. Real estate will continue to be a great investment long term.
The cost of living in Auckland will be affected by rates rises, insurance costs and the recent release of a discussion paper on transport funding options to get Auckland moving. Auckland is faced with a growing population, with already congested roads and talk of road tolls and regional fuel tax growing.
Central Auckland will always be prime real estate due to the associated convenience it offers. Areas such as Ponsonby, Mt Eden, Royal Oak, Greenlane and Meadowbank will always be in demand. Double-Grammar zones will be synonymous with premium prices.
Auckland city apartments can only go up in price as the population grows. Many young immigrants and students love the city life.
Auckland suburbs Te Atatu and Avondale are on the move pricewise, due to close proximity to the city. Also, Riverhead, Kumeu and Huapai can be expected to follow this trend now that sewage systems are being connected to these areas. This will mean increasing density of housing in various areas that have close proximity to beaches and quality schooling.
South Auckland, West Auckland and parts of the North Shore, for instance, Birkdale, Beach Haven, Silverdale, Rodney and Helensville, areas that have been traditionally known as lower-priced areas, will be big movers in price due to their current affordability.
We will see higher prices in the lower price bracket of $350,000 to $650,000 across Auckland as there will be more demand from investors and first-home buyers, and people trading up in this accessible price range.
Large family homes with two kitchens or separate accommodation will also be in demand as we find instances where two generations of families are purchasing together.