Manukau Market Wrap

So how is the market?

Things are looking good; volume is still down, but prices are stable and clearance rates have significantly improved. We have definitely seen a resurgence in activity this past month in Manukau. Stock levels remain low and demand appears to be stronger than supply. So, have there been more buyers, or just less stock? It is a combination of both, and there are a number of positive contributing factors at play.

Manukau’s statistics

There were 370 sales in August 2019. When we compare this to August 2018, the number sat at 391 — so, in terms of sale volume, Manukau performed pretty well.

The average sale time sits at 47 days with an average sale price of $770,000 (although this number is down from $860,000 compared to the same time last year).

If we compare these figures to those across New Zealand in August, the numbers decrease by 6.1% from the same time last year (5,959 homes sold, down from 6,346) — the lowest level of sales for 7 months. Additionally, we’ve had 3,624 fewer new listings than at the same time this year.

With limited choice in many parts of the country for new listings, I would say that people are waiting before putting their homes on the market closer to spring or summer (which is traditionally the case).

However, what we are finding is that listings which have come in before spring are dealing with less competition. The past three sales I made all sold within the first week of open homes and either above CV or for a record sale price on that street. Buyers are definitely out and ready to buy, particularly first home buyers. If your home has that unique factor — i.e. a home with an income or a sub-dividable section — these are also always popular.

Market highlights

The removal of Capital Gains Tax from conversation and the reduction of the Official Cash Rate (leading to record low interest rates) has led to more people buying, more investors back in the market and generally more confidence overall.

Prices going up in the regions — in the more desirable larger regional cities, the price gap is no longer as big as it once was. This could be interpreted as more people deciding to just stay and buy in Auckland.

Investors who had been holding off from engaging the market are not getting anything for their money in the bank. Confidence that the Auckland market isn’t going to tank is luring them back in.

First home buyers are in force. The past six months has probably been the best time in years for them to buy given the attractive interest rates. The recent commentary from Tony Alexander, BNZ, suggests fixing for one year in anticipation of further rate falls to come.

Immigration is still strong and the market is also looking good in Sydney and Melbourne across the ditch.

In summary

A winter that started with some pretty average figures has moved on to spring with everybody feeling a lot more confident about the market moving forward. Whether we see a dramatic improvement in prices is yet to be determined, however, right now is definitely the best it has been during the balanced market (post 2016).

So how is the market?

If you were to ask me how the market is now, I would say not bad. I might even say pretty good. It continues to be a good time to buy, prices are the lowest they'll probably go, and (thanks to the RBNZ lowering the OCR to 1%) interest rates remain low and look set to stay there for quite some time.

With that said, it’s not a bad time to sell either for most properties — assuming you’ve adjusted your pricing expectations to the new norm in Manukau and Auckland overall. Will the low interest rates see an upturn in the market? It is unlikely in the immediate term, however it has already increased confidence and activity in the market. With further relaxing of the LVR rules expected (and perhaps some relaxing of the banks’ lending criteria), predictions point to an upturn maybe late 2020, but more likely 2021–22.

Market highlights

The monthly property report from REINZ shows for the first time in eight months, the number of residential properties sold across NZ in July increased by 3.7% from the same time last year to 6,118. This number is also the highest for the month of July in 3 years.

This suggests we’re starting to see some early signs of growth. We can attribute this to more certainty post the removal of the Capital Gains Tax bill, renewed confidence as parts of the market adopt the new norm in terms of pricing, and the warmer weather we’re looking forward to (which is when we tend to see more activity in the market).

Manukau’s statistics

We are seeing many positive signs for the road ahead. Manukau’s median sale price for July 2019 was $820,000 and when we compare this to July 2018 this figure was $828,000. Auckland's average asking price lifted by 1.5% compared to June 2019 to $928,152 for the second month in a row — that’s still some way off the region’s 2019 peak average asking price of $960,715 in February. I'll be watching with interest to see what happens during the rest of this quarter.

In summary

Across Auckland, prices haven’t really fallen that much; volume yes, but prices have been pretty static for quite some time. We can expect a nice stable market for the foreseeable future.

Manukau features as one of the suburbs that are among the 10 New Zealand suburbs and towns that have the most potential for growth in new residential dwellings, according to research from Colliers International.

Pete Evans, Colliers national director of residential project marketing, says the focus in 2019 has shifted to the supply of affordable homes and regeneration of traditionally less expensive suburbs.

“Investment in these suburbs through new development and infrastructure will invigorate these areas and create more desirable places to live with continued growth potential,” he says.

The "Golden Triangle" centres of Hamilton, Tauranga and Raglan – along with the Auckland suburbs of Onehunga and Westgate - remain among the pick of top growth areas for the second year in a row.

At the higher end of the market, Auckland’s Wynyard Quarter is expected to experience continued improvement in the lead up to Apec in 2020 and The America’s Cup in 2021.

SO WHY MANUKAU?

Manukau is one of three centres outside of CBD that Auckland Council has prioritised for growth through to 2050 and is expected to undergo significant change.

The Transform Manukau project involves major investment by council and central government and covers 600ha of land including the metropolitan centre and Wiri suburban area to the south.

This will regenerate the town centres at both Manukau and Wiri, support substantial residential and commercial development and focus on improving services such as healthcare and schooling, as well as increased tertiary education presence in the area.

Transportation improvements include a new integrated rail and bus station, upgrades to Great South Road, a mass transit route from the airport to Botany via central Manukau, and creation of a comprehensive cycle network. The Auckland suburbs of Onehunga, Northcote, Manukau, New Lynn and Panmure are primed to defy the city's housing market slowdown.

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