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Mar 14, 2017
Time to Invest
The rental market is a great measure of the health and state of the real estate industry. Here in Kerikeri, we are experiencing a simple case of low supply and high demand for housing, resulting in soaring rental increases; some between 15%-20%. Below are a few tips on base improvements that can be made to substantiate the rental increases: Insulation – now required to meet certain standards, but also safeguards health and comfort Heat pumps/transfer system – for comfort, heating efficiency and keeping the home dry Car parking – depending on the location of the property, extra car parks are a real bonus A fully fenced section – security, privacy and child safety Banks often look at the health of the rental market when assessing their lending criteria. So, whether you’re buying or selling, now is a great time to come in and have a chat with the REAL Team.
Mar 7, 2017
How's the Real Estate Market?
Everybody has their own personal take on what is happening in the real estate market and depending on their circumstances, it will have a major influence on what they believe. Buyers regularly push the belief that the market is softening because this is what they want to believe. Often, they will actually make a story around the softening market to justify presenting lower offers and playing the waiting game. Sellers on the other hand, always talk the market up and make incredibly strong arguments justifying why their property value is so high. We in real estate, often start with an optimistic seller and observe the changes after they have sold and the overnight transformation into the pessimistic purchaser. The reality is that the market is the market and it doesn’t really matter how many words you wrap around it, the formula is quite simple. SUPPLY and DEMAND. In Kerikeri, we observed a very strong market right through 2015 and 2016, and we have to say, 2017 has started a little more sedately. In 2015 and 2016 the market was driven by strong buyer demand (particularly from Auckland), and an increasing shortage of houses available for sale. According to our own sales data which makes up a substantial share of sales in the Kerikeri market, there are over 500 net people (over and above those who have left) living in the area over the last two years. That’s a substantial percentage increase in our population, well above the level anticipated in local authority population growth projections. You only have to drive through town these days or try find a car park to feel the change that has happened. A large number of the new people arriving in the area have been older, retired or semi-retired couples which has helped keep the strain off the local school enrollments. As more jobs are created by service industries that wrap around the growing population and the construction boom continues, then it is likely that even more younger families will move to the area. This year, our stock levels have improved and buyer demand is steady but not as strong. Buyer motivation to make offers has decreased from peak levels in 2016, with some buyers taking a ‘wait and see’ approach as the media covers stories about lower sales figures in the Auckland area. Consequently, we are witnessing longer days to sell across the market and many auction campaigns are being handed in without the result hoped for by vendors. We have also been seeing some vendors reducing their prices to remain competitive, which is also a sign of the market losing its edge slightly. To be fair, some of this price correction is just unwinding optimistic pricing, as some properties were strategically priced ahead of the rapidly increasing market last year. We believe the market in Kerikeri, moving forward, will remain steady and here’s why: - Very strong rental demand - Shortage of houses under $500,000 - Increasing numbers of retiring baby-boomers - Record number of new houses being built, creating more jobs in the area - Shortage of fully serviced sections - Interest rates have remained low - Great summer in Northland 2015 – 2016 - Increased number of migrants from regions other than Auckland, as value and sales volumes increase elsewhere e.g. Tauranga - The most significant driver of the Kerikeri market, is undoubtedly the Auckland property market. Whilst Auckland is experiencing softer buyer demand at present, all economic indicators would point towards this being a temporary slowdown due to strong immigration figures and the strong Auckland job market Given that nobody has the perfect prediction, it’ll be business as usual for some time. Until more houses are built, stock levels increase and buyer demand softens, we in Kerikeri can enjoy more of the same. So if you’re thinking of buying or selling, call in for a coffee and chat or request a no-obligation, free appraisal – you may be pleasantly surprised!
Nov 16, 2016
Rateable Valuation vs. Market Valuation
Obviously, there are less boring things on God’s green earth to talk about than Rateable Values (RV), but it’s an important subject nonetheless. Common misconceptions of the true meaning and a bombardment of other acronyms have left a few, well, misguided. RV is also sometimes known as the Government Valuation (GV) or Capital Value (CV) and it consists of two components – the Land Value (LV) and the Improvement Value (IV) (buildings, fences etc.). The LV component of the RV is used by Local Authorities in the Far North to apportion rates amongst rate payers and it is calculated every three years based on the recent sales values of land and houses. It represents a single point in time and therefore does not reflect the dynamic nature of market forces such as supply and demand. A Registered Property Valuation done by a Registered Valuer is not an RV, but is certainly a step up in accuracy as this involves a site visit and takes into consideration a great deal more detail and is more specific in nature. Real estate agents often mention the RV in advertising because buyers often like to know the figure. Sometimes, the RV is a rough guide of the Market Value but other times it is completely irrelevant. The RV's relationship to Market Value is ultimately up to you to decide. When deciding though, consider this: the RV doesn't usually take into account anything that makes a property better or worse than others in the area. For example, the condition of the house and land, chattels included, landscaping improvements and so on. It is for this reason, that sometimes an RV can seem inaccurate, especially when a house has recently been renovated, or when a property is unusual. Home owners can choose to get their houses re-assessed by the local council if they feel that it is unsuitable. Going by the previous example, if a house has recently had renovations that required a building consent (especially if there has been an increase in the floor area), the house will automatically be visited by a QV Valuer and the RV will be adjusted appropriately. An easy way to think about this wonderful web of funny business is this: When properties sell below RV, we are more likely in a buyers’ market with low demand and high supply. When properties sell above RV, we are more likely in a sellers’ market with high demand and low supply. Currently, we are the later. Therefore, RV’s should not be looked at in isolation, but must always be looked at in conjunction with Market Values in order to get an accurate grasp on the state of the current market. The graph below clearly demonstrates the volatility over the years when comparing Market Values vs. RV. Thanks to our graphical guru Vince Buxton for pulling the stats together!
Oct 12, 2016
September Market Commentary
A huge 69 sales for Kerikeri and surrounds (inside the Kerikeri High School zone) in September sets a new record for any one month. This high number of sales was driven primarily by increased interest in bare land and lifestyle properties (land size above 1 hectare). This brings the number of unconditional property sales in the area for 2016 to 390 compared with 353 for the same time last year or just over a 10% increase. High performing sectors are bare land with 95 sales in 2016, up 70% from 2015. This excludes unrecorded Kerikeri sales of land on developments that are awaiting title issue. Also the volume of sales for homes over $800,000 is up 250% from 2015. There were 23 sales above $1million compared with only 7 by this time last year. The number of sales for houses priced below $450,000 has halved since 2015 due to low stock levels. Entry level prices have reached a level in Kerikeri where there are fewer and fewer houses to be found under $450,000. The median house price for the area in 2016 is now $560,000 ($580,000 for July through September) up from $490,000 in 2015. Strong enquiry continues across all sectors of the market with diminishing stock levels resulting in higher prices being achieved. Developers are starting to show interest in investing in the area with the likelihood of better returns than in recent years.
Sep 3, 2016
Latest National Sales Trends and Kerikeri’s Outlook
Sales figures for July, released earlier in the month by REINZ, show a cooling trend in the property market for all of New Zealand, driven largely by a slowdown in Auckland. This slowing of sales was also reflected in Kerikeri’s figures for July - yet enquiry from buyers is still going strong! New listings have picked up a bit in August and so have sales in the most desirable price brackets, with properties often selling within a week of being advertised. Like many provincial towns in New Zealand our property market is cyclical. Our cycles historically lag behind Auckland’s by a couple of years. Sales volumes and prices dropped significantly in 2008 with the GFC, bottoming out in 2012, steadily increasing afterwards and significantly so in the last two years. This recent growth has been primarily driven by Aucklanders moving north or securing property for the future for lifestyle/retirement. By analysing local sales statistics, we estimate that about 600 to 800 new people moved to Kerikeri last year (66% of our purchasers came from out of town) and we are expecting similar gains this year. Fewer vendors (about 20%) are leaving Kerikeri when they sell because it has become less affordable to move to other areas, especially in Auckland, than in the past. Despite a 20% increase in building consents over last year, the quantity of new homes being built is not keeping up with demand and now desirable sections are starting to run short as well. Contrary to some opinions there are not many sections available on the Kerikeri market (many advertised are multiple listings and/or under offer awaiting title issue). There are few developers in the area developing new land and the high demand to short supply is pushing land prices up fast. Prices for average size sections with no outstanding features have nearly doubled over the last two years averaging $210,000 today. Most established sewered sections are sold and there are few opportunities to add more for several years until the Far North District Council expands the sewer infrastructure. This has led to medium size homes on 500m2 sewered sites, that were selling for $400,000 a few years ago, now selling for mid $600,000s within a few days of being on the market. The majority of house buyers moving to the area have been purchasing in the $400,000 to $800,000 range using a portion of their funds from sales of their homes in Auckland to purchase, leaving the excess funds to invest or live on. Buyer focus has increased prices over the last two years as stock has diminished and prices risen, both here and in Auckland. Median house prices in Kerikeri have risen from $380,000 in 2012 to $560,000 in 2016 to date. We eagerly await the rollout of the proposed new sewer infrastructure by the Far North District Council so that more affordable sections and houses become available and we can keep up with the demand from people looking to secure a life in this terrific area we are so fortunate to live in. Planned growth has so many benefits to a small town like ours, bringing vibrancy, jobs and opportunities. We look forward with a great deal of interest to the details of how our town planners see the future of our town and their plans for introducing them. It’s safe to say there’s a fair bit of catching up to do.
Aug 20, 2016
By the Numbers
REINZ reported a 37% increase in sales volume for Kerikeri in April compared to April 2015. This compares with an increase in Northland of 18%. Sales volumes in April were down slightly from March in Northland but up 16% in Kerikeri. Median prices rose 29% in Kerikeri compared to April 2015; again, the highest levels in Northland. Median section prices have been rising with greater numbers of people choosing to build. The median price for 2016 is underestimated as there are many unreported sales over $200,000 still awaiting title issue. Our figures continue to show that about 2/3 of sales are going to new residents to the area, with increasing interest from non-Kerikeri resident investors. First time home buyers are struggling to get a foot on the ladder in Kerikeri with fewer and fewer properties available under $500,000. This newsletter gives you some important points to consider. We are always happy to meet with potential clients or members of the public seeking information. Winter is almost upon us. We wish you well with your heating and your building’s weatherproof qualities. We are fortunate to be in such a temperate part of our country!
Jun 26, 2016
Keeping you Informed
It’s important to us to provide honest information and opinions regarding buying and selling property. This month’s heading for our newsletter reflects this commitment to you. With the shortage of homes and high buyer demand, multiple offers have become commonplace and many of our current sales are now multi offer situations. Multi offer situations can be confusing and frustrating for potential buyers. Confusion can arise if potential buyers do not fully understand the process which, unfortunately can result in a feeling of unfair treatment. Therefore, it is important that real estate Sales Representatives provide clear information about the process and ensure that it is well understood. A common misconception to be cleared, is that it is the Vendor and not the Licensee who has chosen a multi-offer sale process. Timeframes in a multi offer process is another area of confusion, especially if the potential buyer is under the impression that they are the sole interested party. Understandably, suspicions may arise if there is a ‘last minute’ competing interest. This again shows the critical importance of all parties being comfortable and aware of timeframes and the next steps to secure the property, through the careful attention and guidance of the Sales Representative. Confusion often strikes once again if an earlier offer has been declined by the Vendor, and more than one buyer becomes interested in the property thereafter. In this instance, the multi offer process renews and the potential buyer has the opportunity to submit a new offer. As always, this must be their ‘best’ offer if they are serious about securing the property. At REAL, we have clearly documented policies and procedures for this process. This assists us to have a consistent practice and enables us to provide clear information to all parties. All in all, we aim to govern a fair process and do our utmost to assist everyone involved to the best of our ability.
Apr 20, 2016
Supply and Demand Affect Our Prices
We continue to see values going up, especially close to town. Two bedroom units have been selling like hot cakes (as long as they are within walking distance to town). The attraction for inner town living is predominantly the convenience for retirees, having Kerikeri’s cafés and restaurants and all the services at your doorstep and being able to enjoy the vibrancy of the town. From our own experience, we could add to that list the savings of time and money in commuting from rural areas, being able to enjoy the full programme of sporting, cultural and entertainment events in Kerikeri and not forgetting the beautiful and interesting walk around the bypass to the Stone Store basin and Rainbow Falls which is a regular event for both locals and visitors alike. In the short term, “supply and demand” is the factor in price change. The short supply and high demand continue. In the past, an Auckland buyer would displace a Kerikeri resident who would usually move out of Kerikeri to Auckland, Tauranga or wherever. Today the option for many of us to move to ‘other’ larger centres is not an option because of higher costs, so as a result more of us (vendors) are choosing to stay in Kerikeri. The effect of this is a population gain that we estimate to be around 6 -800 people in the last year! To stabilize the market we need to add to the existing stock and keep up with demand. First of all, Kerikeri needs more residential land within walking distance of town with the infrastructure to support it. Secondly, we have reached the point of not having enough tradespeople to build the homes on order now. Will values continue to increase? Yes we believe so… * Source REINZ Statistics