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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.
Feb 16, 2024
Is 2024 Starting To Turn The Corner?
Say goodbye to 2023, which according to many commentators had the worst commercial sales in nearly 30 years. Buyers were nervous with the cost of living and rising inflation, with high interest rates and an election season which seemed to occupy nearly 6 months of the year. While inflation is slowly trending down, there is still significant uncertainty as to when the Official Cash Rate (OCR) will begin to track below 5%. Initial expectations aimed for a midyear adjustment, but it appears more likely to be in the last quarter of 2024. With a low volume of sales for the last 18 months, data on value and returns is limited and the first question on a seller’s mind is “What is my property worth”? This is reflected in many properties being offered as “By Negotiation”, as vendors were uncertain as to meeting buyers expectations and sought to find the middle ground. Already this year we can see a change happening with prices being stated or asking for offers over a value. Construction costs appear to have stabilised and with the prospect of lower interest rates coming, the new build option becomes more attractive. As with any cycle, well designed properties in good locations have been in demand. However the challenge has been readying properties for sale or lease where factors such as location, design, layout, or value present questions for the purchaser. Those in the market for a property may need to broaden their expectations to successfully navigate deals.
Dec 4, 2023
Market Update: December 2023
It’s no secret. Kerikeri and the Far North are on track to experience one of the lowest volumes of open market real estate sales in a calendar year for 20 years. Average timeframes to sell have quadrupled since the peak of 2021 and unless you are the top one or two value propositions in your price bracket, you are going to have to sit it out and wait longer until the buyer who just loves what you have on offer comes along. It’s no wonder some vendors are losing patience and asking where are the buyers? The quiet period after the Global Financial Crisis from 2008 to 2010 saw similarly low numbers but that was when the town was much smaller, accentuating the poor results of this last year. So, what’s behind the slow down? [button text="Sign-up to receive the latest Market Update straight to your inbox" link="https://www.realkerikeri.co.nz/newsletter-sign-up" target="_blank"] 1. Normal cyclical correction to the extraordinary hype of activity in 2020 to 2022. The Covid bubble drove property sales activity and prices in Kerikeri to unsustainable levels. There had to be a correction, not just here but right across the country. Kerikeri median prices have held up well, so far, dropping around 10%, compared to other markets where prices dropped 20 to 25%. This makes Kerikeri’s prices more expensive for people planning to move from other areas and could give them reason to pause their plans or look at other attractive provincial towns, until the gap closes again. We are hearing about prices rising in Auckland and Wellington so the gap is already starting to close. 2. Section sales are way down to their lowest levels on record. The appetite for building new homes dropped away because of escalating land costs, construction costs, compliance costs and challenges with the supply of materials. All this uncertainty means that people have favoured staying where they are and renovating or buying an existing home versus building. 3. The rise of the retirement village. Over the last four years there has been a significant rise in retirement village house package offerings at reduced prices to the open market on a license to occupy basis. There is no doubt that people choosing these packages over open market homes has resulted in lower sales volumes in the open market. However, we understand that even retirement village sales are significantly slower in 2023 than previous years. 4. Fewer people moving to Kerikeri. People often say to us they move to Kerikeri for the warmer climate, the accessibility to Auckland and the lifestyle offered with boating in the Bay of Islands and access to Far North beaches. Unusual, severe weather patterns and road closures have put a damper on all of these over the last year. The normal flow of people travelling to the north to visit or in search of a new home has been disrupted. Boats have sat in safe harbour for most of the year and the weather has left many of us wondering if we should be renamed the summer-less north. For those worried about catching up with the grandkids in the city, this recent spate of weather has presented hurdles they were not anticipating. Additionally, slower growth in the construction sector has meant that fewer “tradies” have moved into the area than during the construction boom of the last few years. Last, but not least, most people need to sell elsewhere before they move here. If sales are slower where they live, then the result is things slow down for us here. That’s the market in a small provincial town when you rely heavily on inward migration for growth. Typically, these trends are temporary. Once our feeder markets pick up, roads are open permanently again and weather patterns settle back down people adapt and life gets back to normal. The recent change of government offers a glimpse of hope as policies come into play that favour the property market across New Zealand. However, it takes time for these policies to be implemented and have an effect. The first positive signal of change is the number of new listings across the country rising by an extraordinary 20% over the last month. People who had put their plans on hold leading into the election are finally acting. It is simple maths, that the more properties on the market, the more people will move around, and some of them will start to look at moving here again. Vendors can try various strategies to sell more quickly in the current market such as increasing their exposure through higher marketing budgets, or lowering their prices to be more competitive, or spending more money on their properties to make them more attractive or even changing their agency. All of these come at some additional cost, and none are guaranteed to bring a better result unless you are prepared to give your property away. The fact is that buyers are not coming as fast as they were. This is the nature of a cyclical market folks and neither you nor any agent, no matter how clever or experienced they are, can greatly influence that. The truth is, it is the time to be patient, trust your agent to be doing their job, out there everyday promoting your property. The market is turning, the buyers are returning, your property will be sold. It’s just a matter of time. [button text="Sign-up to receive the latest Market Update straight to your inbox" link="https://www.realkerikeri.co.nz/newsletter-sign-up" target="_blank"]
Sep 22, 2023
Market Update: September 2023
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 Latest Tony's View - Tony Alexander (Economist)
Aug 16, 2023
Market Update: August 2023
Signs of optimism are returning to the real estate sector. The media is reporting signals of FOMO returning to major centres and quarter-on-quarter price declines are slowing signalling the bottom of the market in those areas is being tested. A steady July in Kerikeri with a total of 23 unconditional sales reported albeit 3 of these were lifestyle blocks sold in late 2021/early 2022 where titles have just recently been issued. That’s still up from the monthly average of 16 sales for the last 3 months. The house price index has dropped around 10% from the peak in the 3rd quarter of 2022 in the Bay of Islands ward. All eyes are on the election this year as many investors wait to see if policy changes will make investment in housing more desirable. Section sales, usually a good indication of changes in consents and construction starts, are down nationally and locally but there appears to be enough work ahead for construction companies in the meantime. Some have already shifted focus to commercial or government contracts. Net migration figures have been higher than expected putting pressure on the rental market in Auckland. Some of these people will be eligible to purchase homes in a year or so. It is yet to be seen how the impact of people transitioning to higher interest rates as their fixed terms end will impact the market around the country. According to one recent report from ANZ, the number of people unable to pay their mortgages is less than projected. It also helps to see the sunshine a bit more often than in the first half of the year. This lifts the spirits and starts to get people thinking about making their next move. It is this time of year when we are busy preparing appraisals for the usual Spring rush of listings. Our advice is to move ahead of the herd and position your property on the market now while the stock is relatively low. In the end, prices paid are all relative to the economic principles of supply and demand so be ahead of the game to win.
Jul 16, 2023
Market Update: July 2023
With positive news of more buyers entering the housing market in our major cities, this winter could be an opportune time to make your next property move while prices are still lower. Many of the forces that have held the property market at bay are set to change direction. Mortgages are set to be easier to obtain on the back of proposed relaxation of loan-to-value ratios. Banks are very keen to get back to lending after a period of low activity. With interest rates levelling out and net migration at high levels, many are expecting a turnaround in the market this Spring/Summer and a significant increase in activity across the country. Over the past month we have seen a rise in the number of first home buyers, some who are remote workers moving from the city, making enquiries, and coming to our open homes. We have also seen a pick-up in interest in some higher end properties that have been on the market for some time. People who have their ducks in a row with finance are in the best position to take advantage of this window of opportunity to be ahead of the pack. Navigating the lending environment can be a minefield and getting expert help from a broker can save a lot of headaches. (See below for links to our local brokers or the latest market update from economist Tony Alexander) Another problem facing entry level buyers is that there are still relatively low stock levels in the lower and mid-price brackets. There are 100 homes priced over $1 million on the market and 68 under $1million. Only 15 under $700,000 where most entry level buyers are searching, so there is less of a choice. However, that is a lot more choice than was available 2 years ago when the market was hot. Many sellers simply do not appreciate the advantages of having their houses on the market in winter. They wait until Spring when the gardens look perfect, and the sun is shining. The flaw to this reasoning is that the property market is subject to the same principles of supply and demand as any other market. When people hold off from listing, the supply increases all at once, which means lower pressure on buyers. Our experience shows that buyers are searching steadily all year around except for the slow down over the Xmas holiday period and the boost in February March when people return from their breaks. In summary, to attract the most buyers, it is better to sell when there is less competition – and that’s often in winter. Here are some top tips for selling in winter: Make sure your home is warm for viewings. Nothing puts people off more than a cold home. Keep your home ventilated. First impressions are important, and the musty smell of a damp home is sure to send buyers off to their next choice. Pleasant smells can work in your favour. The smell of coffee or fresh baking or light up some of your favourite scented candles. Empty houses feel quite stark, particularly in winter. Staging can provide a feeling of homeliness. The important thing is to be there when others are not. Higher demand and lower supply is the best situation for vendors. Local Mortgage Brokers: Sarah Curtis Mortgages Quantum
Jun 12, 2023
Market Update - June 2023
How’s the market? The property market can be viewed as a cyclical system. Over time it has proven to increase in value by approximately 6 to 7% per year. But that increase does not occur in a linear way. We describe it as fluctuating up and down according to the cycle of seasons shown in the diagram below. We think we are currently in the winter season of the cycle. Typically, in this period, interest rates are higher, loans are harder to get, stock markets are uncertain, and property buyers are fewer. The Property market CycleThe Property Market Cycle What’s happening with house prices? The quarterly median price for a house sold in Kerikeri during the 3 months ending April was $1,080,000. That is up 18% from the same period 1 year ago and up 48% from 3 years ago. It represents a new peak in median price. However, the stats in this case are not telling the full story. The distribution of sales has become skewed to the higher end of the price spectrum as lower price properties are currently not selling as well. A change in the mix of properties sold between one comparison period and another can make apples to apples comparisons challenging. So, we rely on other information to assess how market pricing is being affected. Listing and selling properties at the coal face, we are seeing vendors accept robust appraisal prices more often, reduce their pricing expectations after launch and prepared to negotiate with buyers. As a result, sale prices achieved are between 5 and 10% below the listings price after negotiations. We suspect that our true median price is 5 to 10% below the peak level achieved last year. Older properties may have dropped more than that as newer-built property prices are being propped up by construction costs and replacement values. By comparison Auckland and Wellington regions are down 22% and 20% respectively from their peak values reached in 4th quarter 2021 and have effectively wiped out any price gains since December 2020. What are the market drivers? Negative: Weather related closing of roads has made it difficult for buyers to get here. Residential investors are sitting on the fence awaiting the election and hoping for regulatory changes. Positive: Net migration into New Zealand has increased which usually helps to displace people from the cities to the provinces after a time. The attractiveness of Kerikeri as a place to retire or move to for a better lifestyle How are the number of sales tracking? There were 92 unconditional residential, lifestyle home and bare land sales in the Kerikeri and surrounds area through the end of May 2023. This represents a 30% decrease in sales volume from the 131 sales for the same period last year. Bare land sales are significantly down 70% from 17 through May 2022 to only 5 in the same period this year. There are 6 years of bare land inventory on the market at the current pace of sales. We expect this to impact the number of local building consents and new house starts. Nationally building consents are down 26%. How long is it taking to sell? The average number of days to sell has risen above the 10-year average sitting around 70 and is rising each month. Vendors have to adjust to the reality that their property could take 6 months to a year to sell (in some price brackets longer), especially if they are not competitively priced. How are inventory levels tracking? Inventory levels are up to 285 unique listings for sale on Trade Me in May. This level has been holding steady for most of the year as some owners have withdrawn properties from the market after not having sold making up the difference between the higher number of monthly new listings versus properties sold. *Greater Kerikeri approximated the Kerikeri High School enrolment zone and includes Waipapa, Doves Bay Peninsula, Inlet Road Peninsula, Kapiro, Waimate North Road and branch roads, Wiroa Rd and branch roads, Pungaere Rd and branch roads, Puketotara Rd and branch roads, Waipapa West Road and branch roads, Takou Bay. **We use quarterly moving averages as these mitigate some of the wild monthly variation that occurs when reporting monthly medians on smaller number of sales.