How the property market performed in Auckland for April

The Auckland market remained stable in April 2019. Confirmation around the abandonment of CGT legislation and the combination of factors such as low interest rates and the lowering of the OCR may mean a potential upturn in action in the coming months.

With a dip in sales volumes and an increase in the inventory of listings, it is giving buyers more options; however, countering that, prices remain stable which indicates we are in a healthy, 'normal' and realistic market climate.

House prices
Median house prices across New Zealand increased by 6.4% in April and if you exclude Auckland, this number is 7.6%. Apart from a brief spike to record high of $900,000 in March 2017, Auckland's median price has remained within a fairly tight band around $850,000 since August 2016 and the latest figures suggest they show no sign of spiking up again any time soon.

Properties sold
In Auckland, the number of properties sold in April fell by — 16.3% year-on-year — the lowest for the month of April in 11 years. For New Zealand (excluding Auckland), this number fell by 9.5% when compared to the same time last year. It is worth noting that April is usually a slower month for the residential property market because it traditionally marks the end of the summer selling season, but sales would have been particularly affected in April this year because the Easter, ANZAC Day and school holidays coincided within a single two week period during the month.

Median sale time frame
Auckland saw the median number of days to sell a property increase by 4 days from 37 to 41 when compared to the same time last year.

Number of listings
The number of listings increased by 15% bringing the total inventory to 29 weeks, up 11% year-on-year

REINZ Statistics Table - April 2019.jpg
How will the CGT (capital gains tax) affect the property market?
index.png

It could lead to small upward pressure on rents and downward pressure on house prices. 'In the short-term there may be some initial relief in house price affordability as investors look to sell their property to avoid paying CGT. However, in the long term it’s likely to push house prices up as people look to invest more money in the family home, as there will be less incentive to invest in rental properties or other forms of investment e.g. equities' - Bindi Norwell, Chief Executive at REINZ

The key report details of the proposed CGT

  • Capital gains tax to apply after the sale of residential property, businesses, shares, all land and buildings except the family home, and intangibles such as intellectual property and goodwill.

  • Tax rate to be set at the income-earner's top tax rate, likely to be 33% for most.

  • Calculation of gains not to be retrospective - tax to be applied to gains made after April 2021.

  • Art, boats, cars, bikes, jewellery, personal household items and the family home to be exempt.

  • Losses on the sale of assets bought before April 2021 will generally be able to be used to reduce paid on gains from other assets.

  • Increase the threshold of the lowest tax rate (10.5%), allowing more income to be taxed at the lower rate.

  • Increase social welfare net benefits to allow similar benefits as low-income earners post tax threshold adjustments.

  • House on farms and surrounding land up to 4500 sq metres exempt from CGT, calculated as a percentage of total farm value.

  • CGT on small businesses can be deferred (roll over relief) if annual turnover is less than $5 million and sale proceeds are reinvested in similar asset class.

  • No support to make company tax progressive, i.e. smaller companies paying less than 28%

  • Capital gains tax estimated to raise $8.3 billion over five years.

  • Expand coverage and rate of Waste Disposal Levy, expand the ETS and use congestion charging.

  • Better tax benefits for KiwiSavers on low and middle incomes.

* Data sourced from the First National Bank of South Africa Repeat Sales House Price Index, REINZ and oneroof

Maximising your property's value

It’s the little things

Sometimes the simplest things have the most impact: replacing door handles, kitchen cupboard handles and light fixtures is a cost-effective means of modernising your home and adding value.

It’s surprising the difference a fresh coat of paint can make in a home. It easily revives and brightens a tired space. If your budget is limited, try painting a feature wall to add depth to a room.

Tired kitchens or bathrooms can easily be updated by changing a portion of the room rather than undergoing a full renovation. Simply updating the flooring, retiling the walls, fitting new appliances or changing out the countertops can change the entire look of a room.

686-FB6348-Manukau-City.jpg


Declutter and deep clean
Try walking around your home and viewing each room through the eyes of a stranger, identifying those items that are simply taking up valuable space. Then, tackle one room at a time, separating your necessities from the things you really don’t need.

    Put away any items that have crept out of their storage space like coffee cups or piles of laundry.
    Recycle any paper, plastic or glass.
    Fix any broken items or throw away anything beyond repair.
    Find a charity or someone in need and donate those items you no longer need.

A deep clean of your home both inside and out, tackling all of those tasks you usually avoid, can have an immediate return on the value of your property.

781996459.jpg


Avoid over-improving
While it may be your goal to grow your wealth by investing in property, it’s worthwhile remembering not to overspend on renovations where you won’t see a return on your investment.

Before you consider any type of renovation, do your research on the area you’re in to determine how much your property may be worth after renovations. That will give you a good idea of how much you realistically should spend. Or call me over for free advice on getting your home ready for market.

https://www.mortgage-express.co.nz/blog/maximising-your-propertys-value-nz