Shannon's Manukau market wrap
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Manukau Market Wrap

Nationally, the stock availability continues to decline as expected in Winter. The volume of sales in June was not surprising and fell in June by -3.8% from the same time last year to 5,978 according to the latest data from the Real Estate Institute of New Zealand. In Auckland, the number of properties sold in June fell by -3.2% year-on-year .

There's less competition

With the lowest number of new listings for the month of June since listings records began, Auckland saw the lowest number of properties sold for two months continuing the trend we’ve seen for a few months now. Sale prices seem to have stabilised and all in all, with the lack of new listings, open homes and buyer activity is actually pretty good. The pool of buyers is still the same, there is just less to look at.

Manukau's median sale price compared to Auckland's

The median sale price for Manukau is $680,000 last month and take a 12 month average, this figure sits at $675,000 - down 2% last month however if we look at a 5 year average, this median increased to 8%. Across the country prices are still climbing, but the rate has slowed. The median sale price in Auckland remains steady with an 0.1% increase last month and over a 5 year average, has risen 7.2%.

Manukau's median days on market compared to Auckland's 

For Manukau, this number is 45 days and take a 12 month average, this drops to 39 days. The median number of days to sell a property in Auckland increased in June by 5 days from 40 to 45 - compared to the same time last year.

In summary

When do we expect to see the market come back? That’s a prediction well out of my pay grade but all the underlying factors are still in play, housing shortage, low interest rates, immigration etc. And to be fair - we are 3 years into the flattening, here in Auckland anyway. Volume started dropping in 2015, prices started to, or arguably did plateau in 2016, we’ve had a wee fall and they appear to have plateaued again now in 2019. They say on average a 4 year turnaround.Residential property sales activity looks set to tick along at the same controlled pace in the second half of the year as it has in the first, with average values growing in a restrained fashion. Other key factors to watch over the rest of 2019 include policy decisions from the Reserve Bank (e.g. LVR and bank capital rules), the landscape for investors’ returns, the potential flattening off of residential building consents, and how buildings insurance premiums might change due to risk based pricing.

Property market predictions for the rest of 2019

The activity in the residential property market indicates a continued steady pace and values holding well for the second half of 2019.

Key factors to watch for will be the policy decisions from the Reserve Bank (e.g. LVR and bank capital rules), the landscape for investors’ returns, the potential flattening off of residential building consents, and how buildings insurance premiums might change due to risk based pricing.

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1. Sales volumes to stay pretty flat, with various downward drivers (e.g. slowing GDP growth) largely offset by other positive factors (e.g. low mortgage rates).

2. Average property values still rising but in a restrained fashion, with the more affordable towns and cities in ‘regional NZ’ likely to record the largest increases. By contrast, it wouldn’t be a surprise to see further weakness in Auckland – as buyers bide their time.

3. Further loosening of the LVR rules in November, reflecting our expectation of steady market conditions. Possible options include lowering the owner-occupier deposit requirement from 20% to 15% and/or raising the investor speed limit for high LVR lending from 5% to 10%.

4. Imposition of extra capital requirements on the banks by the end of November, with a phased approach (potentially over five years). This may prompt some consideration of offering different mortgage rates to borrowers with different abilities to service their debt.

5. Banking sector competition to remain intense and ‘rate wars’ to be a recurring theme - regardless of whether or not the Reserve Bank cuts the official cash rate again.

6. Foreign Buyer Ban to remain a contributing factor to softness in the Central Auckland and Queenstown property markets.

7. More homeowners potentially ‘trading up’, or in other words taking advantage of a subdued market, especially in Auckland, to get a bigger or newer property, or in a better location.

8. Rental yields to continue to rise (albeit from a low base), as rental growth continues at a steady pace of about 5% annually, and above the growth in average property values.

9. Residential building consents to flatten off, as capacity constraints around labour and materials bite. However, they will still stay high, and that’ll be necessary to help alleviate housing shortages. A looming ‘re-set’ for KiwiBuild could have implications here too.

Source

Should I buy or sell first?

In today’s changing property landscape, some important questions remain at the fore for home owners and potential buyers. One being - should we buy a new house before we sell, or should we sell before even considering buying?

It comes up time and time again, because in a competitive market, people are often worried they’ll miss out on a rare dream home if they wait until they’ve sold their existing property.

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On the other hand, some are scared to list their home for sale without having already bought a new property in case the settlement period comes and goes, and they are left essentially homeless and forced to find (and pay for) temporary accommodation.

In a market where supply and demand are reasonably balanced, selling your existing home before you buy, tends to make the most sense. It means you know exactly how much you have to spend when it comes to shopping around for your new home.

If you have your home completely sale-ready when you list, you can spend the time scheduled for your open homes visiting other properties for sale. It’s also a good idea to do some looking around before your own property is listed, so you have a clear idea of what you want.

Have your finances in order as much as possible based on the asking price of your own property so when you’ve sold or are close to selling you can move quickly on your preferred new home. Remember too, you can make your purchase conditional on the sale of your other property.

It all gets a little more complicated when the market is heated. Many people feel buying before they’ve sold is the only way they’re able to compete and it gives them the reassurance they won’t be shut out of the market and left without a roof over their head.

The obvious trap here is the risk of over-stretching yourself financially if you are forced to accept less than you hoped for your existing property and you have no nest-egg to tide you over. It’s worth remembering too that if you’ve already bought, you may be persuaded to take a lower price just to sell quickly.

You can also talk to the selling agent for the home you want to buy to see what time frames you can work out around settlement dates that give you the maximum reasonable amount of time to sell your existing property. Even at auctions, which typically have a 30-day settlement period, you can sometimes ask if the vendor is happy to extend to perhaps a 6-8 week settlement period.

In short, the best answer is to do as much research and preparation as possible before listing so you’re ready to move quickly if need be. And keep your sales consultant is aware of your time frames, they can help you make it all fit together.

Ultimately, it’s all a question of timing.