Property market update report for October
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The property market in Auckland remains balanced and stable with homes turning over at a relatively slower rate in recent months as listings remain relatively high.

We are finding homes are taking a while longer to sell given the current stock levels, however, there is still a good percentage of homes selling each month and values are reasonably consistent. Sellers are finding that in a balanced market, prices need to be competitive from the get-go and aligned with current market conditions and buyer activity if they are to sell. The silver lining to that, of course, is that prices are relative; so, if you're buying and selling in Auckland in the same market, it balances out.

It's also worth noting that in Auckland over the past 20 years, property prices have nearly doubled every 10 years, as the median 10 year rise is 96% which you can see in the chart below (this data is using REINZ House Price Index). When you compare this to all of NZ, Auckland has sustained a relatively consistent higher 10 year growth in prices that are well ahead of the NZ total at 88%.

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Regardless of the rates of values and turn over, the balance between demand and supply always needs to be considered in assessing market activity and property values.

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How accurate is the CV when valuing my home?

Figures presented by CoreLogic showed that the more expensive the property, the more likely it was to sell at a lower price compared to its CV.

In the past three months, homes with CVs higher than $1 million have typically been selling for prices 1–4% below their CV. Mid-priced homes with CVs between $800,000–$1M have typically been selling for prices close to their council value.

Homes with CVs below $650,000 are still selling for prices as high as 9% above their CV.So how is a CV calculated exactly?Property Institute of New Zealand Chief Executive, Ashley Church, says that the valuations are a ‘guesstimate’ rather than an accurate indicator of what a home is actually worth. “CVs are conducted once every 3 years and they’re a ‘snapshot’ of the approximate value of any given property at that moment in time.

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They shouldn’t be regarded as an exact measure of the value of a home — and they’re certainly not intended to provide an ongoing price guide.”The methodology for a Council Valuation is very different to a formal valuation. A CV is a blunt instrument. It’s a computer based assessment of the value of your home based on what other homes in your area have sold for; whereas a formal Registered Valuation is conducted onsite and takes account of the condition of your home, any renovations you might have made, whether you have a pool, the number of bedrooms you might have, the condition of your home — all of the things that make it unique.

Mr Church says that the question of the value of your home has also been further confused by the recent proliferation of ‘free’ online home valuation services. “There are a couple of paid services that are getting much better at remote assessment – but the free ones are generally about as effective as reading tealeaves or chicken entrails and their advice should be treated with a grain of salt.”

The competition heats up for Spring as an increase of listings hit the market

As we look at the statistics produced in this first month of spring, it tells us how the market has performed in September but also how this will likely influence property values as we move closer into summer.

Realestate.co.nz reported that there were 3,896 listings added on the site in Auckland (up 31.9% compared to September last year). In the regions (excluding Auckland), an all-time high national asking price for properties was recorded, with the average asking price across New Zealand standing at $690,733. Property value growth in the Auckland region has increased by 0.8% year on year, despite a 0.7% drop in the last quarter setting the Auckland median value at $1,047,415.

Buyer activity viewing levels are up reporting 855,326 unique browsers searching listings on the site across the country during September. New listings are higher than they were a year ago in Auckland — I see that number increasing further this quarter.

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In market feedback from investor groups, few existing landlords are thinking of responding to new regulations by selling their properties. Likewise, for existing home owners who are considering selling but require a higher sale price for their existing home in order to purchase their new home, affordability may encourage them to keep their property off the market.

Then there's continued competitive pressure in the mortgage lending market and further decreases to interest rates by some banks which add to the balance of a stable property market.

What does this suggest for the property market over spring into summer?
With affordability remaining a factor for some buyers looking to buy in the Auckland market and some sellers deciding to hold tight rather than list, my opinion is that the rise in listings over the next few months is not likely to go above normal levels that we traditionally see in this season. This should see Auckland property values and the market remain steady.


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