Property Market Update 2020
To assess the current state of the market, it is always good to look at a bit of background first. The headline below shows the end of 2018 and early 2019 was not very positive for real estate, especially in Auckland with prices flat to falling and headlines like this captured the feeling fairly accurately.
So, most of 2019 was gloomy for Auckland residential real estate with listings and sales volumes being way down on prior years.
However, the surprise 0.5% OCR drop by the Reserve Bank in September 2019, saw mortgage interest rates drop to 70 year lows, circa 3.5%pa and this has motivated buyers, notably investors back into the market. First Home Buyers who were active during the lull over the 2019 winter also became even more assertive and the press reported this as follows:
“Record Breaking End to 2019”
“Raging finish to 2019”
And it has continued on into 2020!
“January activity well up…”
Developers have got back into the game in Auckland again also, with new building consents well up year on years 2018 to 2019.
So, a definite U turn in the market from about October 2019 with many more successful sales, including an increase of auction sale closure rates from a low of approx. 30% back into the 70% range.
So, what does all this positive news mean? As usual, high demand and low supply (improving but still lower than needed), means only one thing!
The average house price in NZ now has increased to $714,747.
The number of people who came back from holidays in January 2020 saying this is the year I am going to buy has been demonstration of the much more positive sentiment in the property market.
The only other notable event is the continuing impact of the Foreign Buyers Ban that came into effect in November 2019 as shown below –
Big Decline in residential property sales to Overseas Buyers
Overseas owners are selling more NZ residential properties than they are buying…”
There was a dramatic slide in the number of homes sold to overseas buyers last year, according to the latest figures from Statistics NZ.
These show just 0.4% of residential property transfers throughout the country were to overseas owners in the fourth quarter of last year, down from 2.3% in the same quarter of 2018.
In the Auckland region, where activity by foreign buyers has traditionally been greatest, transfers to overseas owners dropped to 0.6% in the fourth quarter of last year from 4.9% in the fourth quarter of 2018. One of the biggest falls was in Auckland’s Waitemata Ward, which includes leafy city fringe suburbs such as Herne Bay, where the percentage of homes transferred to overseas owners dropped to 4.0% in Q4 2019 from 13.7% in Q4 2018.
The figures also show that overseas owners are selling twice as many New Zealand residential properties than they are buying.
In the fourth quarter of last year overseas buyers purchased 147 residential properties (down from 885 a year earlier) but sold 333 over the same period (down from 414 a year earlier), suggesting they are net sellers by a substantial margin.
SUMMARY – the doldrums of 2019 are behind us, the market is lifting quite strongly now, with some bank economists predicting a 6-8% increase in prices across Auckland in 2020. It is time to get into the market whilst interest rates are so low!
HAPPY VALENTINES DAY FROM EVERY ONE AT TEAM MARS REALTY