Auckland’s housing market is turning in time for the traditionally busy spring season, with prices climbing in seventy-six suburbs in the past three months. City prices spent more than a year tumbling from record-high values in late 2021 and are now beginning to rebound.
While homeowners will be happy with the news, those wanting to enter the market may find rising prices an additional hurdle as buyers already grapple with soaring interest rates.
New Zealand’s median house price took a more than $150,000 dive during a 15-month slowdown after the market peak in November 2021. Kerikeri’s median prices continued to climb until third quarter 2022 and the house price index for the Bay of Islands ward has now come back around 10 to 15% off the peak.
The latest data from analysts CoreLogic gives the best indication that a rebound is now under way, chief economist Kelvin Davidson said. “Back in June, 71 suburbs had recorded a rise of at least 0.5 per cent in the previous three months. But spring forward to September, and that count has risen to 188,” Davidson said.
Kiwibank chief economist Jarrod Kerr said the housing market was likely to pick up again now interest rates appeared unlikely to climb higher and migration had surged. “Putting a stake in the ground, saying this is the bottom [of the market], I think we can do that now,” he said.
About 100,000 more people arrived in New Zealand over the past year than left. And while New Zealand had been in a building boom in recent years, construction had cooled in the past 12 months because of high building costs and falling house prices, Kerr said.
“Every migrant that comes here either takes a rental or looks to buy,” he said. “So, we are going back into a situation where demand and population growth is outstripping supply. That is not good for affordability, it is not what we need, but that puts upward pressure on prices.” If the Reserve Bank begins lowering interest rates next year, that could further boost prices, he said.
Stabilizing interest rates and strong net migration have long been key lead indicators of a market set to rise. Declining interest rates, whenever they come, are sure to push prices back up if accompanied by continuing population growth pressures from net migration. Generally, migrants seek jobs in the cities and once in a position to buy after their stand down period, can displace current city dwellers to the provinces. Strong migration from places like Auckland, Wellington and even Christchurch has led to Kerikeri’s extraordinary growth.
A total of seventeen sales completed in Kerikeri during August down around 30% from July and about 40% from a year ago. Four of these were lifestyle blocks sold in late 2021/early 2022 which have been waiting for titles to come through. That is running a little under the monthly average of sixteen sales for the last 3 months.
The election still has many people sitting on the fence whether selling or buying. Policies outlined by National, if put in place, could have significant impact on the feasibility of property investments versus other investment types and could open the higher end of the market to overseas buyers from countries other than Australia and Singapore.
For our part we are gearing up for a busy summer by expanding our sales team, appraising properties, and advising vendors on how to get the best prices. It feels like the market is a coiled spring and we want to be prepared for the bounce back. Wayne at the head of our commercial arm continues to build momentum and offer advice to those looking to buy, lease or sell in the commercial and horticultural sectors. Pop in for a coffee and a chat or give any one of our team a call for free friendly advice.
Follow these links for more information on the outlook for the property market and the economy.
Economists see 'signs of further strength to come' in housing market
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Apr 9, 2024
Best Time To Buy
More houses for sale, the prospect of lower interest rates, and the likelihood of improved capital gain make this the optimal time to buy a home in Kerikeri. The Kerikeri market is experiencing a unique moment in time right now. Prices have settled into their new normal, lots of new stock is coming to the market and increased buyer activity is resulting in multi-offers. Some economists are suggesting that interest rates will start to decrease sooner than expected and predicting house prices to increase over the course of 2024. I have a view that the Reserve Bank has over-crunched the economy and will play catch-up policy easing from late this year. So, if I were borrowing at the moment, I would probably take a mix of 6 and 12 month rates. “Tony Alexander Economist. For buyers, this means that for the first time in years it will likely get easier to service a new mortgage over time rather than harder. This combined with expected capital gains, means now is a great time to buy. More stock means more competition for vendors. Presentation and pricing are more important now than ever. The ones that do, are likely to see a successful marketing campaign with possible multiple offers that will result in the best possible price in the current market. We expect the current market conditions to remain steady while the economy is correcting itself. First home buyers are back and this is a welcoming sign for a healthy property market. There is always a reason why someone wants to either move up or downsize. In a steady market you will find that the gap between what you are buying and what you are selling isn’t as huge. It doesn’t matter where you are, good houses always seem to find buyers, no matter what’s happening in the market. Right now is a sweet spot for buying. If you want to find out more about how our unique, high-performance system can help you achieve your property goals please give us a call or pop into our office anytime. We would be glad to show you around and make you a coffee while you are here.
Mar 7, 2024
Market Update: February 2024
A busy start to the year! It has been a surprising start to the year for us, with massive numbers of appraisals and new listings, a slow but steady increase in buyer enquiry and a fair amount of time advising and reassuring vendors that things will get back on track. We have recorded 16 conditional sales in February but more than half of these rely on other sales chains to complete. 75% of these are under $1million. Looking back REINZ reported 12 unconditional sales for January compared with 14 in December. This is a result of the typical lower levels of buyer activity in December leading up to the Xmas period. The outlook for February at the time of writing this report looks similar to January. Record numbers of new listings and appraisals On the reverse side, the number of appraisals and new listings coming onto the market so far this year has broken all records. The paralysis caused by the uncertainty leading up to the election, the delays with forming a government and then Xmas has led to a herd of sellers coming to the market at once. Consequently, inventories have shot up with latest numbers approaching 400 listings on TradeMe up from 340 just a few months ago. This is good news for buyers and sellers. It provides more choice for buyers than they had previously except in the lower price brackets where inventory is still slim. In time, it stimulates more activity across the whole market. More inventory and fewer buyers are shifting the higher price brackets firmly into the buyer’s market category. Inventories in the over $1million bracket would take over 2 years to clear at current sales volumes and motivated vendors with deadlines are seeing the writing on the wall and reducing asking prices to meet the market. Price outlook Our feeder markets are showing signs of an upswing with Auckland prices on the rise although sales volumes are still relatively low and 70% of auctions are being passed in. Most economists are predicting that the higher interest rate levels will continue to hold the New Zealand property market at bay for at least the next 6 months of 2024. Our observations are that most of our buyers are planning to make a sideways move to Kerikeri from another area or wish to downsize. Only a few are looking to upsize. This is a sign of our economic times in New Zealand. At our current price level, even people from many Auckland suburbs find it hard to move here and release equity to live on as they have been able to in the past. Until the price differential widens again (either increases in our feeder markets or further decreases here) then some people may choose to move to more affordable parts of the country. With the majority of buyers looking to downsize, the higher demand is for lower priced properties resulting in lower inventories and leaving high inventories in the higher brackets where demand is lower. First time homebuyers remain mostly non-existent which ties to our higher than NZ average prices, lower than average wages and a challenging lending environment. Investors appear to be sitting on the fence although a few seasoned, cashed up investors are starting to play their cards as opportunities present themselves. As reported in December, much of our sales activity depends on stimulus from Auckland and other centres. Usually a major shift in these markets takes 3 to 6 months to impact on ours. We watch with interest as these markets change over coming months.