Market movements analysed

By: Vicki Phillips

There is little doubt that residential sales activity has cooled across much of Auckland, including on the Hibiscus Coast, with active buyers enjoying a greater selection of properties to choose from in comparison with 2015 and 2016.


Residential sales on the Hibiscus Coast have averaged just over 90 per month so far this year – even less if you take out March, which recorded an unusual 129 sales. This compares with an average 123 sales per month for 2016, 134 sales for 2015 and 108 for 2014, so this data certainly supports cooling activity.


There is a large supply of new housing on the market with some larger building companies needing to shift properties and slightly lowering their prices. Added to anecdotal evidence of lower auction attendance and clearance rates this should surely point to a buyers’ paradise. Ordinarily this would be the case. However, looking deeper into the data, there is much more going on, making projections of market movement unpredictable.


Investor activity has certainly slowed, with the drivers for this being two-fold – loan to value ratio (LVR) restrictions, which require a greater deposit (now 40 percent) and the restrictions of capital flows from China. These factors have impacted the lower end of the market, favoured by investors, rather than new developments or higher value properties.

Lifestyle blocks with future development potential have also been hit by a lack of overseas investors.


LVR restrictions on new dwellings, whilst not as severe, are having less of an impact. Demand for new subdivisions is still relatively buoyant with restricted land supply, labour and materials being a significant driver behind activity and values in this market segment. I believe this is why median sales values have not fallen significantly with the drop off in sales numbers. The median (the middle sales value rather than an average sales value) may be skewed when the lower end of the market eases at a greater rate than the upper end.


Because of the many drivers across the Real Estate market, applying the median percentage change as reported in the statistics, is not a viable method of estimating market values. This fails to take into account the uniqueness of any property, locality and surrounds that a local property professional’s experience can provide.  


This is particularly evident with many of the automated valuation services and the mass appraisal system utilised for setting rating values sometimes having large margins of error when compared to appraisals or registered valuations.  


As market uncertainty builds, lenders increase demand for registered valuations, so check with your lender early in your due diligence process if this is needed, as leaving it to the last minute could be problematic.

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