Real estate: Calm before the storm

THREE significant players in the Hawke's Bay residential real estate market say it is the calm before the storm.
The Hawke's Bay market has been characterised by sticky values and low volume. House prices in the region are still below the market peak of seven years ago while the national average, led by main cities, has increased 16 per cent above the peak.
Historically, regions followed the main cities by a few months, so if history is to repeat itself a substantial market correction is on its way. Auckland is 33 per cent up on its 2007 peak.
Real Estate Institute of New Zealand (Reinz) figures show there were 171 houses sold in Hawke's Bay in August.
With more than 200 active agents and the industry maxim that 20 per cent of agents make 80 per cent of sales, winter has meant lean times for some Hawke's Bay agents.
Tremains Real Estate director and co-owner Simon Tremain said some had pulled out of the industry but veterans "are still doing quite well".
"It has been quite hard for new people coming into the industry to be successful," he said.
Any agent who sold 60 houses a year was doing well, he said.
Property Brokers Hawke's Bay manager Paul Whitaker said it was not a lucrative job for all "but there are some agents to do very well out of it".
Some of his agents sold about 100 properties a year, he said.
Kaine Wilson, Harcourts Hawke's Bay franchise owner and managing director, said his agency was already experiencing an upturn and "recruiting heavily", looking for 10 more agents.
"We have listed over 22 auctions in the last 10 days, so that is a good indicator of confidence in the local market."
The three agency bosses took different paths into the industry.
Mr Whitaker's professional cricketing career was cut short due to injury after emigrating from England to play for Central Districts. He soon proved successful off-field, becoming the top Property Brokers agent with 160 sales in his best year for the Palmerston North-based company.
Kaine Wilson turned 21 as a real estate agent but was already an experienced businessman, a founder of Hastings' Tritech Office Technology Solutions in 1989. He sold his interest to enter real estate.
For Simon Tremain, a real estate career was a necessity. His father, former All Black Kel Tremain, left the company in limbo when he unexpectedly died in 1992. With brother and mother, he found himself hurriedly taking real estate papers so they could run the business.
Brother Chris left for politics but the business has grown, with Tremains bringing Colliers International commercial property franchise and Sotheby's top-end residential franchise to the region.
Hawke's Bay realtors don't agree on company rankings or market share.
Mr Wilson said a greater number of listings did not always equate to a higher number of sales, or a higher quality of service.
"My opinion is the person selling the most volume is not necessarily the best agent. There is no formula that says because you sell the most you are the best. If you look at the retail sector, selling the most is often the budget arena. Our brand is about quality in terms of the service we are delivering to maximise money for the sellers.
"We are always going gangbusters against one another - it has been for many years. Every dog has its day. One month they are number one and the next we are number one."
It is against Reinz rules for agents to use its data to advertise market share.
All say after the 2007 peak the market was quieter than now.
Mr Whitaker said there were similar volumes but confidence was not "much higher".
"People know we have scraped the bottom of the barrel - prices are not soft anymore," he said.
"There are few soft deals out there, so I think people are buying knowing there is a new level being established and we're on the upwards curve."
National remaining in power gave a boost to investor confidence, he said.
Its election promise, to increase first home buyers' assistance, could be a market trigger from April 1.
The KiwiSaver First Home deposit subsidy becomes the KiwiSaver Homestart grant and the amount doubles, with $6000 if in KiwiSaver for three years, $8000 after four years and $10,000 after five.
Welcome Home loans eligibility is expanded, with house price caps at $550,000 in Auckland, $450,000 in Wellington and Christchurch and $350,000 for the rest of the country.
For both schemes, the income cap will be $80,000 for an individual or $120,000 for a couple.
KiwiSaver members can withdraw all of their savings except for the $1000 kickstart.
Mr Whitaker is a scornful critic of a cause of the Reserve Bank's decision to place restrictions on low-deposit bank mortgages, saying they hurt the regions for the sake of controlling the Auckland property market.
House prices in Auckland have started to level, which may see an easing of restrictions.
There was no doubt Hawke's Bay was in for a big correction, he said.
"I have been doing this for 16 years and I know that when the market gets going and there is increased equity in peoples' houses it gains vicious momentum.
"It is only a matter of time when that happens. Nobody will predict it and the regions will align themselves with city prices.
"Whether that is this year, next year or the year after, it is going to be soon. It is going to start with a 20 per cent rise and it will all happen from there just like in Auckland - a five-year double."