6 OneRoof.co.nz
THE PROPERTY RICH LIST | COVER STORY
A $3.8B housing grab by the super wealthy In the last two years the number of $5m-plus sales in New Zealand tripled as the country’s superrich set out to bag a better trophy home. CATHERINE MASTERS reports on a luxury housing market that seems to be immune to the price pressures being felt elsewhere.
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here is more wealth in the upper price bracket of the residential market than ever before in New Zealand, say those dealing in $10 millionplus sales. Agents are seeing that wealth displayed across people with businesses which have done well out of the Covid pandemic to those who have seen massive equity gains in their existing properties as prices boomed over the last 24 months. While the middle and bo!om are now struggling from pressures such as rising interest rates and inflation, the top of the market appears to be swimming along as people with that amount of wealth are largely immune. What agents on the ground are seeing is backed up by new OneRoof statistics from its data partner Valocity which has tracked high-end transactions. Between 2015 and 2019, the annual average number of residential properties selling for $5m and above was 100, while the annual average number of $10m-plus sales was 11. By 2020, the number of $5m-plus sales hit 211, 16 of which were in the $10m-plus bracket. The total value of sales in the $5m-plus bracket for 2020 was $1,413,846,992 – almost double the total amount spent on top-end properties in 2019. The top end did even be!er in 2021, with the number of $5m-plus sales jumping 51% to 334 and the number of $10m-plus sales reaching 32. The amount spent in the top price bracket was a whopping $2,353,581,301, but still only 0.3% of Kiwis’ total spend on residential real estate in 2021. The bulk of high-end sales were in Auckland, followed by Queenstown, with others trending around coastal areas, such as Mt Maunganui and Papamoa in Tauranga. OneRoof spoke to a range of people involved in the industry and key themes emerged, including: • The growing wealth divide between the top and the middle/bo!om. • Suburbs and coastal locations favoured by the wealthy tend not to change as these areas are seen as a safe and solid investment. • $10m does not buy as luxurious a home as it did a year or two ago, with entry level to some locations now si!ing at around the $5m mark. • More top-end homes are going to auction. • Many wealthy people are savvy business entrepreneurs but are not household names, preferring to fly under the radar, and the new wealth being seen includes a growing number of younger Kiwis. Chris Farhi, head of insights at Bayleys, which has a partnership with global real estate business Knight Frank, says New Zealand was flagged in the latest
Knight Frank Wealth Report as having the highest expected rate of growth in the world for Ultra High Net Worth Individuals (UHNWI) – the standard definition of a UHNWI is $US30m, which is about $NZ45.7m. “One of the big themes that popped out of the Wealth Report this year was that the wealthy have go!en even wealthier during Covid,” says Farhi. Agents who spoke to OneRoof repeatedly expressed amazement at the amount of wealth in New Zealand. They say while there are plenty of buyers out there in the $10m-plus category it’s a competitive market in part due to the lack of stock in this price range.
Growing wealth gap
Brad Olsen, a principal economist and director for Infometrics, worries about the growing wealth divide in this country as demonstrated by statistics such as OneRoof’s. He thinks the wealth that is apparent in the residential real estate market is down in part to the redirection of money from those who have found themselves in a more affluent position. The wealth itself is not a surprise as there has been a shift upwards at the top end given the sheer magnitude of money which moved into the housing market after the arrival of Covid, he says. The Reserve Bank puts the total value of housing in this country at $1.5 trillion which even Olsen says is a number with so many zeroes it’s hard to get your head around. “The fact there is such an apparent market of the $5 million to $10 million both surprises me and doesn’t at this point,” he says. What it does highlight is how well some businesses and entities have done in recent times. Olsen says the flight to property at the high end is unlikely to change anytime soon given the return on stocks and investments have been variable to downbeat. The wealth gap is concerning, he says, especially with research showing 14% of parents are having to help their children into a home with most of those children unlikely to be able to pay them back. “I guess it just reinforces the divide, certainly at a time when we see inflation at a generational high and we see the housing market turning around.” Among agents seeing that divide in action is the Wall family from Wall Real Estate, which consists of father Graham and sons Andrew and Ollie, who are behind many of the country’s top end sales and who hold various price records – the $38.5m paid for former Hanover Finance director Mark Hotchin’s house in Orakei, Auckland in 2013 has yet to be beaten.
