If you’re one of those people who think Auckland’s apartment market isn’t looking good, think again.
Our recent Apartment Collective auction campaign was a huge success and resulted in 12 of the 20 apartments on offer selling within an average of 20 days. On auction day, over 130 attendees squeezed into the auction room. Bidding was strong with over 160 bids submitted giving a clearance rate of 60%. In a market where we continually face the challenge of getting buyers to commit, our auction event went against the grain and showered success. The message is clear: if you want to attract strong buyer competition, you must have a good marketing campaign and excellent exposure.
Another positive indicator of growing confidence in Auckland’s apartment market is on the investment front. We’re excited to see reinvigoration as several investors who we haven’t seen for 2–3 years are returning to the market actively looking to buy. There are still some financial challenges as the major lenders remain cautious, with our team having spent more time with their purchases in order to get their deals across the line. Overall, the current market is far from stagnant. Buyer and investor appetites exist, but only when properties are well-marketed. So, if you’re looking to buy, sell or invest, talk to us – we’re the experts in Auckland’s apartment market.!
Real-time statistics from realestate.co.nz show June as a month of highs and lows right across the country. Four regions saw an all-time high average asking prices, while four other regions registered all-time low new listing numbers.
Auckland region’s average asking prices back up over the $900,000 mark after a three-month slide, but new listings are scarce. In June this year, the average asking price for a home in the Auckland region lifted back over the $900,000 mark after three consecutive monthly falls over March, April and May 2019. June 2019’s average asking price stood at $914,050 which is up 4.4% compared to May 2019.
“When we started recording data 12 years ago on realestate.co.nz, it showed that the average asking price for a home in the Auckland region in June 2007 was $536,993,” says Vanessa. “Ten years later, in June 2017, the average asking price had spiralled exponentially to $916,635 and looked like it was accelerating to the one-million-dollar price tag,” she says. “This did not happen,” says Vanessa.
New listings in June (2,563) were down 12.7%, however, the total number of homes for sale was up 8.7% (9,085 listings) both compared to June 2018. “This tells us that homes are staying on the market for longer. “If people are serious about selling their home to purchase another in the same market, then perhaps they want to consider the pricing on both sides of the equation when approaching their negotiations.”
Ted Ingram has no time for agents who shy away from auctions. He has just come off one heck of a roll, calling auctions for 20 apartments for Ray White City Apartments in Auckland. Nine sold under the hammer, and deals were being struck for another to five to six properties. Sales prices ranged from just over $140,000 all the way up to $1.2 million.
A buzzy crowd of more than 100 people were in the room for the Apartment Collective – a grand event putting a large number of properties for sale in one place – and another 50 or 60 people were watching the action online. Only two properties at the end of the day, both on lease hold land, did not attract starting bids. Auctions are still the best way to sell a property,” Ingram says. “We’ve found the buyers, we’ve just proven that, and they’re cash unconditional.” Opening the auction, he reminded the room that with keen vendors, good investment returns and low low interest rates, it was time to “buy as much as you can, borrow as much as you can.”
Director and sales manager of city apartments Daniel Horrobin reckoned it was the biggest crowd for some time, showed that the market is turning. Bringing 20 properties to auction in one marathon session (usually it’s just six to eight on a day) was clearly a punt that paid off for the company. “We’ve drawn the property investors back into the market,” he said. “They’ve sat tight for a while and now they’re ready to come back in. There were a few owner occupiers buying, but the investors are back.” Ingram and Horrobin say that the big auction has helped them find the buyers, that they’ve proven auctions are alive and well in the city and – a smiling dig at media – gloomy prognostications can be put to rest. Tonight Ray White offices across major Australian cities will be bringing their Apartment Collective auctions to the hammer.
Statistics New Zealand recently released data showing their estimate that the New Zealand population grew on average by 1.9 per cent or 89,000 people per annum between June 2013 and June 2018. That adds up to an extra 445,000 people. The average household occupancy rate around New Zealand is 2.7 people per house. So housing those extra people required an extra 165,000 houses. Auckland’s housing market peaked two and a half years ago and since then turnover has fallen, prices have eased marginally, and no-one is feeling FOMO – fear of missing out. Investors are backing away with some selling because of new regulations or simply because they feel like taking their capital gain. Many are not selling however because the returns on money they realise from a sale will be so low sitting on bank deposit that continuing to get some yield with capital gain potential later on remains attractive.
For young people the time is good for buying because there are far fewer people showing up at open homes, attending auctions and submitting tenders than was the case up to three years ago. Will buyers stop going to the regions? Eventually yes. This will be partly because the big housing cost savings from lower prices will ease further (prices rising in the regions), tourism has flattened, and jobs growth will likely remain stronger in the cities than regions. This latter factor is something happening globally and not just here in New Zealand.
Does this mean one should be despondent about locations outside our main cities? Not at all. It simply means that Auckland soared then plateaued and the same will happen eventually everywhere else. When that occurs, possibly in most places by the end of the year, general housing commentary in New Zealand will likely remain fairly uninteresting and muted until the next cyclical upturn comes along, perhaps over 2022-23.