As we made the adjustment to more freedom following the move into level two, the Auckland property market is showing positive signs of springing back.
Open homes have been busy with eager buyers looking for their next home, while investors have been actively shopping too, only their interests have been drawn towards the smaller, high yielding apartments.
This flurry of activity spread over into the auction rooms as our group achieved an 89% success rate post-Covid. But, despite a positive number of new listings in May, our numbers were, as expected, down compared to 2019.
However it’s not all down with our current sales volume sitting just about on par with 2019. And the recent surge in buyer interest, plus the willingness from sellers and buyers who are wanting to transact, promises a quick resurgence. We put this down to three things:
1. The ongoing confidence in the Auckland property market
2. Record-low interest rates from the major banks, and
3. Investors being attracted to Auckland apartments due to the high net returns available in the CBD.
As we continue to move out of the levels and away from the effects of Covid-19, a fitting mantra seems to be ‘The only way is up’. So, if you’d like to strike while the iron’s hot and buy, sell or invest in Auckland’s apartment market, give us a call.
Why are we seeing strong sales results now? – Carey Smith | Ray White New Zealand Chief Executive
Our clients that have come to market in recent weeks have achieved largely great results because of the basics of supply and demand. In regards to supply, the number of properties ‘for sale’ has reduced significantly. With less properties for buyers to choose from – this leans towards our sellers obtaining an advantage in achieving better results. So the buyers active in the current market are competing over fewer homes, which is great news for every property owner who is currently marketing their property for sale.
The other fundamental is that of demand, and in the case of real estate, buyers are the demand. We have seen strong demand from buyers active in the market looking to transact. When we look at our auctions in recent weeks, we have seen the average number of bidders per auction exceed the numbers that were achieved before the current environment. So what factors are contributing to buyer confidence?
1. Interest rates are at record lows – 27% lower than 12 months ago. Importantly, the general consensus among economists is that they will remain at these low levels for the foreseeable future.
2. Interest rates are a driver of home affordability and in many areas, while prices have risen in the last 12 months, corresponding interest rates have reduced.
3. Banks and lenders remain very supportive of lending for residential property. The chart below shows the monthly home loan pre-approvals recorded by the Loan Market Group, which is our loan brokerage partner and New Zealand’s largest independent broker that settles over NZ$650 million in loans per month. Pre-approvals are indicative loan approvals obtained by buyers before they buy a property to enable them to bid confidently.
4. Record levels of government stimulus is part of the supporting reason behind a high proportion of buyer sentiment.
In summary, less supply and strong demand create favourable selling conditions. The current conditions enable us to fulfill our fundamental duty to our sellers: to do everything we can to create as much competition for your home as possible and deliver a premium result for you.
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