OneRoof Property Report - June 2023

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Artist’sImpression

Forhomeowners,thelast18monthshavebeen challengingbutthereisincreasingevidencethatthe markethashitthe bottom.TheReserveBankofNew Zealandsayspricesarecloseto reaching asustainablelevel andhassignalledanendtoaggressiveratehikes,withlast month’s25basispointliftin theofficialcashrateto5.5% expectedtobethelastthiscycle.Thatwillgivesellersand buyerscertaintygoingforward,andwhileKiwisshouldn’t expectpropertyvaluestosurge,liketheydidpost-Covid, thereare hopesof arevival.

Theturninthemarketcomesas researchfromOneRoof anditsdatapartner Valocityshowsjusthow resilientsome locationshavebeenduringthedownturn.Ourteamanalysed everysettledsalebetween2018andMarch2023andfound48 suburbswhereeverysellerhasmade aprofit.

It’sclearfromthepricesbeingpaidduringtheheightof theboomthatsomehousingmarketsaremorepopularthan others,buttheanalysisturnedupsomesurprisingfindings. Themajorityofthesuburbsonthelisthaveaverageproperty valuesoflessthan$1million,andarerelativelyaffordablefor first-homebuyers,althoughoneortwo“rich-lister”locations alsoprovedtobe“bulletproof”.

Thefindingshighlightthegainspropertyownershave madeoveroneofthemosttumultuousperiodsthemarkethas experiencedinmorethanadecade.Losses,whileupduringthe downturn,havebeenrelativelysmall.Andwhilevalueshave fallen13.5%since,theyarestillup22%onpre-Covidlevels.

Forhomeownersthinkingnowisthetimetomakea move, we’veproduced ahelpfulguidetoselling.Also,insidearethe latestpropertyvaluefiguresforeveryNewZealandsuburb, andinsightsandcommentaryfromindependenteconomist TonyAlexanderandpropertycommentatorAshleyChurch.

Keepintheknow!

Thehousing market rebound is closerthan youthink

TheReserveBankofNewZealand signalled thatitisnowdoneraisingthe OfficialCash Tate,followinglastweek’s 0.25percentageliftto5.5%.Itdoe tostartcuttingtherate untillate-2024 butt reasonablechanceitwillstartbeforethat–early nextyear.Butthatis alongwayfrom anyoneholdingoff buyingbecausetheythinkhouse priceswon’tstartrising untilinterestratesstart solidlyfalling,hadbestthinkagain.

Ihaveinhand most responsesin my monthly surveyof realestateagentsthroughoutth undertakenwiththeRealEstateInstituteof Zealand.Hereare someofthepreliminary which gelstrongly with theviewthatthem probably reached abottomandthemove becloserthanmany arethinking.

First,weneedtonotethatthereisasyetnosignthat pricesareonaveragerising. Anet31%ofagents seethemasfallingintheirarea.Andwhen what buyersare mostconcernedabout,afterhigh interestratesandaccesstofinance,49%say worries thatprices willfall.

FOOP –fearofover-paying -is49%andthatis the leastweak readingsinceJanuarylastyear’s22%.The readinga monthagowas68%.So,fearsofpricefalls arestillthereinthemindsof buyers.Buttheirfears areeasingoff

FOMO –fearofmissingout– hasnowrisenforfour monthsinarow.Butat 9%wecannotsay buyersfeel theyneedtobein ahurry. Infact,oneof my readings showsthatweare stillveryfirmlyinabuyer’smarket. Again,wecanseethat firsthome buyershave essentiallydecided thatthetimeisright tomakea purchase.Listings aregood,interestrateshavehit theirpeaks,vendorsarewillingtoacceptconditions, andthereremainfewinvestorstocompeteagainst. Anet54%ofagentssaythat theyareseeingmore firsthomebuyers.Lastmonththis readingwas 22%, Januaryitwas-3%,andthelatestnumberisthe strongestsince October2021.

morepeopleattendingopenhomes.Lastmonthonly anet3%saidthisandthelatest resultisthe strongest since43%inFebruary2021.Thepeakwas64%in January2021.

Othernumbersfrommysurveysuggestauctions areclose to seeing higherattendances,netselling intentions of investorsareeasing,andonly asmall numberof extrainvestorsare showingthemselvesto bemotivatedbyhopesoffinding abargain.

Backinguponeofthedefiningcharacteristicsofthis periodofeconomicchallengewhichwe aretraversing is astillstrong readingfor people’sfeelingsofjob security.Onaveragesince Istartedthe surveyinMay 2020 15%ofagents havesaidthatbuyersareworried abouttheiremployment.The readingbackthen was 48% whichfellto45% inJune2020andhit alowof4% inthemiddleof2021.

Thelatestreadingis13%andthatislargelywhat theresultforthisissuehasbeensinceNovemberlast year.ItmaywellbethattheReserveBank’stalkof recessionatthe endofNovemberlast yearscared manypeople.Butevidenceontheground is thatjob numberscontinuedtorisethroughthemost recent December andMarchquarters,and peoplefeel that theweeklypay chequewillcontinuetoarrive.

Insummary, thesurvey’s results tellusata minimum thatthemarketis bottomingandthatthisis beingdrivenbyfirsthome buyers.

Presumablyitistheyoungbuyerswhoare gettingtotheopenhomes. Anet30%ofagentssay thatdespitetheapproach of wintertheyareseeing

•TonyAlexanderisanindependenteconomics commentator.Additionalcommentaryfromhimcanbe foundatwww.tonyalexander.nz

│ Designandartwork Beth Walsh │Subeditor Akanisi Taumoepeau│

│ Photos Photos FionaGoodall, StephenParker, GettyImages │ │ Data supplied by Valocity │

“LISTINGSAREGOOD, INTEREST RATESHAVEHITTHEIRPEAKS, VENDORSAREWILLING TO ACCEPTCONDITIONS,AND THEREREMAINFEWINVESTORS TO COMPETE AGAINST.”

Agentshavereportedanuptickinattendance at open homesandauctions. Photo /FionaGoodall

Resale gainshave understandably declinedduringthehousing marketdownturnbutmostsellers arestillturning agrossprofit.Now research from OneRoofand itsdata partner Valocity hasfound 48suburbs whereno sellerhas, in thelastfiveyears,made aloss. CATHERINEMASTERS reports.

Despitethevagariesof the economyandthehousing market,OneRoof research showsmostpeoplewho resold inthelast fiveyears stillmadepaperprofits.

Thedataalsoshowsthereare 48golden suburbswherenot asinglesellerinthe last fiveyearsmade aloss.

Thesuburbswerescatteredacrossthe countryandincludedsomeofthemost expensiveplacestobuy property buta largenumberarefitfor first-homebuyer andinvestorbudgets.

OneRoofanditsdatapartner Valocity analysed all thesettled residential resales between2018andQ12023,andidentified whichonessoldfor aprofitandwhich onessoldfor aloss.

OneRoofand Valocityanalysed304,079 propertiesandfound296,496madea profit –that’s97% -withmostofthenolosssuburbshaving an averageproperty valueofunder$1million.

Thedatashowsmostsellersescaped theworstof thehousingmarketslump andthosebuckingthetrend andmaking alossarelikelytoincludepeoplewho boughtduringthepost-Covidheights ofthemarketwhen priceswerehigh andinterestrateslow,butwhoraninto difficultywheninterestrates roseand havehadtosellforlessthanwhatthey paid.

Sofar thisyear,however, the percentageofproperties reselling ata lossisstillsmall,withjustunder6%of nationwidesalesinthefirstthreemonths oftheyeargoingforbelowtheinitial purchaseprice.

While that’sup on the2.1% recordedin 2022,thejumpcomesat atimewhenthe marketisinthemidstofitsworstslump sincetheGFC.

Thefive-yeardatashowedsome surprises:

● Aucklandhassufferedthemostin thehousingdownturnwithonlyone suburbshowingupasnotmaking alossandthat’stherichbeachside suburbofOmahaonthenorthern outskirtsofthecity.Omahahasmade somegiddygainsforowners –the median profitof$446,500in2018 jumpedto$2.21mlastyear.

● Bycontrast Wellington region,which boomedthenplummetedmore thananywhere,has adozenno-loss suburbs.

● Othersuburbswhichonlymadetheir vendors’ profitsincludehandfulsin

Rotorua,Hawke’sBay,Whangarei, andDunedin,withothersdotted aroundthecountry.

● Agentsspokentodescribedmanyof thecheapersuburbsthatdidnotmake alossasstartingfrom alowbase,oras suburbswhichwereunder-valued but whichjumpedinvalue.

● Manyalsosaidwhilepriceshavecome back,the gainsmadeover fiveyears areenoughtoprovide astrong buffer againstlosses.

WayneShum,senior researchanalyst with Valocity,sayssomeofthelossesthat didhappenareprobablypeoplewho bought apropertywithproblems,such as aleakytownhouse, andthosewho overpaidbybigmarginsinAuckland duringtheFOMO (FearofMissingOut) frenzy afterCovid.

Anymarketseessomepropertiessell forlessthanthepurchaseprice,Shum

yearstodo that.Thereare alotofthose kindsofdealsthathappened.”

Shumpoints therewereonlyabout 180,000 resalesintotalin2021through toMaythisyear,butthat’soutofaround 1.7millionpropertiesnationwide,which meansmostpeopleboughtwellbefore thehousingmarkettookoff:“Ifyou purchasedbeforethe boom,you'restill comingoff better.”

HealsosaysbecauseAuckland propertyismoreexpensive,people havetoborrowsometimes hundredsof thousandsofdollarsmorethantheydo inotherareas -a houseinthe regions thatsellsforaround$400,000iseasier tohandlewheninterestratesrise.“In Aucklandyourloan’supat$800,000, $900,000;there's alotlesswiggle room.”

Wealthybuyers

Bigloans arenotmuch of anissuein Omaha,whereagentsreport clientson thewholeare wealthyenoughnottoneed them.

It’s no secretpeoplewithmoney–makethatlots ofmoney –buyinthe seasidesuburbaboutanhourorsofrom Auckland’sCBD, andOmaha,oncejust farmlandandsand, is nowseen asa playgroundforthewealthy.

Lastyear,the 20 settled resalesinthe suburbcollectivelyenjoyedprofitsof justover$50m,almostquadruplethe collectiveprofitsfor2018.

Thesuburbislargelydevelopednow andagentssaybuyersviewOmahaasa suburbthatyoudon’tlosemoneyin.

Sometimesthesalesofmulti-million propertiesgotopeoplewhoalreadyown astylishbeachhousetherebut whowant abetterlocation.

says,with reasonsincludingthelikesof divorcebutmorerecentlyinAuckland it’sdown to developmentsnotworking outwhichcouldaccountatleastinpart forwhyAucklandhas adearth of nolosssuburbs.

“You'vegot alotof resalesinSouth Auckland,wherepeoplethatpaid$2m for a1000sqmsite arenow gettingback $1.5m.”

Therewas alotmorespeculationin Auckland thanthe restofthecountry, hesays.

“Youthinkofthosebigsiteswhere people thought‘Icanbuildsixhouses onittomorrowandmakemegabucks’. Well,that’snotthateasy.Ittakesthree

Agents refertothisasthe “Omahashuffle”,wherepeople in ahouseonestreetbackfrom thebeachmightbe eyeingupa houserightonthebeachandbe preparedtopay$7m forit, or theymightwantonethatbacks ontothe18-holegolfcourse, like ahousePrecisionagentDi BalichsoldtolocalsinMayfor $3.3mwithindaysoflistingit.

Shesays bigprofitsseensince theCoviderahave alottodo withpeople reassessingtheirlife aspirations, not only rethinking theirownlifestylesbutlooking tosecureassetsforfuture generations.

“Alotofpeoplearekindof »

“EVENTHOUGHTHE MARKETISDOWN ALOT OFPEOPLE ARESTILLPURSUING THEOMAHADREAM BECAUSETHEYDO MAKE PROFITS. YOUDON’TLOSE MONEYUPHERE.”

– HEATHER WALTON, RAYWHITE

Omahaon Auckland northernfringes hasseena spike inhouseprice profits. Picture /FionaGoodall

HOUSESALE PROFITS

HOWMUCHMONEYHAVE SELLERSMADEIN2023?

OneRoofanditsdatapartnerValocityanalysedalltheresidential resalesbetween2018andQ12023,andidentifiedwhichones soldforaprofitandwhichonessoldforaloss.

Thefive-yearperiodwaschosenasitcoversthetailendofthe housingmarket’smostrecentcycle,andshowstheimpactofthepostCovidboomanddownturn.

Allprofitandlossfigureswereon-paperonly,anddidnottakeinto accounttheamountofmoneyvendorsspentupgradingormaintaining theirproperty,orhowmuchtheyowedtothebank.

Profitwasdefinedassellingmorethanthepreviouspurchaseprice, whilelosswasdefinedassellingforlessthanthepreviouspurchaseprice.

Ofthe304,079settledresalesanalysed,296,496(97%)madea profit.Resalegainsfortheperiodanalysedtotalled$102.9billion,while lossestotalled$534million.

ThemapshowsforQ12023foreachregionthemediangrossprofit andthepercentageofresalesthatturnedaprofit.

THE48SUBURBSWHERE EVERYSELLERMADEAPROFIT

Theresearchidentifiedthesuburbsthatescapedthe worstofthehousingmarketslump.OneRoofandits datapartnerValocityfound48suburbswhereeveryhouse thatwasresoldinthelastfiveyearsmadeaprofit.

Thesuburbswerescatteredacrossthecountryand includedrich-listerhangouts,suchasOmahaandFernhill, aswellasmoreaffordableneighbourhoodssuitableforfirsthomebuyers.

WellingtonRegionhadthemostno-losssuburbsbut otherstandoutlocationsforresalegainswereDunedin, RotoruaandWhangarei.OnlyoneAucklandsuburbfeatured onthelist,butsellersthereenjoyedthecountry’shighest medianresaleprofit,ofwellover$2million.

Thetablebelowshowsall48suburbs,andgivesforeach themediangrossprofitandmedianholdperiodforQ12023 and2018.

planningforthefuture.”

ButOmaha,whereformerPrime MinisterJohnKeyonceowned aholiday home,isalsopopular withwealthy peoplebecausethey canwearshorts andblendin.

“Ithinkthereare alotofinteresting peopleandhighnetworthindividuals that roamaroundandtheydon’tgive acontinental.”

Noteveryoneisloaded,however,she says.Somepeoplehadtheforesightto buyearlyandextendthemselvestoget intoOmahawhicheven10yearsagowas under-valued.

Asectionthatsoldfor$450,000ten yearsagowouldlikelyfetch$2mtoday, andscarcityisanotherfactorwhich haspushedprofitsup.Balichsaysthe lastavailablesectionssoldinthelast fewyearswhichproduced aspikein landvalue.

BayofPlentyLynmore,Rotorua

Otago Waverley,Dunedin

Southland Waverley,Invercargill

Taranaki Blagdon,NewPlymouth$385,00018.6$83,5005.3

Taranaki Strandon,NewPlymouth $313,0003.1$242,00012.6

Taranaki WhalersGate,NewPlymouth$220,0003.8$110,0007.0

Tasman Brightwater $285,0002.4$189,5007.3

WaikatoEnderley,Hamilton $80,5003.4$165,0005.7

WaikatoTauhara,Taupo $359,0006.7$120,0004.2

WaikatoTairua,Thames-Coromandel$491,0003.0$195,0006.8

WaikatoOhaupo,Waipa $434,7506.7$261,0005.4

WellingtonBelmont,LowerHutt $509,75015.6$227,00010.5

WellingtonEastbourne,LowerHutt $564,5008.3$246,5009.6

WellingtonCannonsCreek,Porirua $300,00017.4$172,5007.2

Wellington Papakowhai,Porirua $332,85017.2$296,00010.8

WellingtonPlimmerton,Porirua $302,50011.6$281,25011.0

Wellington Featherston,SouthWairarapa$352,1645.5$163,0008.3

WellingtonEbdentown,UpperHutt$363,50010.8$195,00010.4

Wellington Pinehaven,UpperHutt $346,00015.3$202,5004.7

WellingtonBerhampore,Wellington $319,0008.2$252,0008.3

WellingtonKilbirnie,Wellington

WellingtonNgaio,Wellington

Note:WhiletheresalesinQ12023arelow,themediangrossprofitsineachsuburbwereinlinewiththeoveralltrendline.

Always in demand

Heather Walton,RayWhiteMatakana’s principal,sayspeoplelikethestraight driveupfromAuckland,asitissafer for visiting teenagechildren todrive, especiallywithOrewanowbeing consideredoneofthehotspotswhere teensgoforChristmas andNewYear’s Eve.

Shesaysmorepeoplethaneverare makinglifechangesandmovingto Omahapermanently,andsheisoneof them.

WaltonsoldinAuckland’sgrammar schoolzoneformanyyearsusingher holidayhomeinOmahaasjustthatbut decidedshedidnotwanttogobackto Auckland.

“Iattendthelocalyogaclassesand everywomanintheclassjustabout says‘I'vejust recentlymoveduphere permanently’.

“Eventhoughthemarketisdown alot ofpeoplearestillpursuingtheOmaha dreambecausetheydomakeprofits.You don’tlosemoneyuphere,”sheadds.

WayneScurrah,Bayleyssales managerfor Mahurangi,isanotherwho hastransitionedtotheareafromthe Aucklandmarket.

HesaysAucklandersarepushingthe valuesup,sayinghalfthebuyerscoming tothewiderareaarefromAuckland andthatthenumberwhowantOmaha ishigherstill:“It'salwaysindemand,I don'tthinkiteverdropsoff.”

Affordablesuburbs

ShumsayswhilesuburbslikeOmaha standoutfor thebiggains,mostofthe increase hasbeenseenacrosslowervalue suburbsbecause that’swheremostof the transactionshavehappened.

Acase in pointisEnderley,theonly suburbinHamiltontofeatureinthenolosssuburbslist.

ButunlikeOmaha,Enderleyis oneof Hamilton’scheapestandmostundervaluedsuburbs,saysJeremyO’Rourke, managingdirectorofLodgeRealEstate.

Ithas,however,seensubstantial changeoverthelast fiveyearswith alot offormer statehouses removedtomake wayfornewtownhouses. Theimproved housinghasliftedlargepartsofwhatisa bigsuburbin astronglocation.

“Asthecityspreadsit'sactuallywell placedbecauseit's asuburbwitheasy accessintothecityandveryeasyegress awayfromthecityeithertoAucklandor theeasternbeachessoitmayovertime becomemorevaluedjustbecauseofthat location.”

Furthersouth,Rotoruagrabbed »

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THEMARKET’SBIGGESTWINNERS ANDBIGGESTLOSERS

Theresearchfoundthebiggeston-paperprofitforQ12023was$11.3mfor aWhitfordmansionthatsoldfor$20matthestartoftheyear.Thebiggest overallprofitbetween2018and2023was$18.25m,foraluxuryhomeinHerne Baywhichsoldfor$23.5min2020.

ThebiggestlossforQ12023was$1.5mforapenthouseapartmentin MissionBaywhilethebiggestoveralllossfor2018-2023was$7.2mforSir JohnKey’sformerParnellmansion,whichsoldfor$16.3min2022.

TOPPROFITSQ12023

TOPLOSSESQ12023

TOPPROFITSSINCE2018

TOPLOSSESSINCE2018

three suburbsonthelist–Lynmore,the “Remuera”ofRotorua,Mangakakahi andSunnybrook.

JacquelineO’Sullivan,principal/ businessownerofRayWhiteRotorua, saysLynmore ishighlyratedforits primaryschools,muchliketheAuckland grammarzone.

“Ifyoucanaffordtoliveinthat neighbourhoodandyourchildrentogo tothatschool,you'rekindofsetup for thefuturetypeofthing.

“In Lynmoreyou're notovercapitalisingno matterwhatyoudo.”

Ontheotherhand, Mangakakahi andSunnybrook,bothfiveminutes’ drivetotheCBD,are favouriteswith first-homebuyers.

Thelastfiveyearshavetreated Rotorua’s resellerswell, O’Sullivansays.

“Ifyoulookatitlong-term,nobody's lostmoney.It'sjustwhenyoubough in the peakand you haveto probablywhenyouwere goingto lossbutifyouhangintherei comeright.”

Surprising results

UpinNorthland,thesuburbsof Hikurangi,MorningsideandRuakaka madetheno-losslist. TonyGrindle, BayleysNorthlandgeneralmanager thesearenotbulletproofsuburbsso asonesthathavecomeoff ap lowbase.

“They'veneverbeenconsider most sought-afterbutpricep whattheyare,that's what'sd attentiontothesuburbs.”

Theyspanthecitylimits Hikurangiinthe north,Morningside inthemiddle oftownandRuakaka tothesouth.

Ruakaka,knownforitsspectacular beach, hasseen expensiveproperties growuparounditbut thesuburb of Ruakakaitselfisnotpricey,hesays.

“Ruakakaistypicallytheblue-collar area builtforMarsdenPointOilRefinery sothehistory ofRuakaka,ifyou go backfarenough,is allaboutproviding housingforthe workersthat camein fromoffshoreandNewZealandto work anddevelop MarsdenPoint.”

Hikurangiis surroundedbyfarmland and wasbuiltaroundthefreezing works,andfurtherbackcoalmines, while Morningsideis apopularnorthfacing suburbin townwhich has affordablehousing.

Anotherno-losssuburbjust southof theBrynderwynsisKaiwaka,in between thebeach meccaofMangawhaiand

KaiparaHarbourtothewest.

Aucklanders seekinga moreaffordable andtraditionalrurallifestyle,where they canhavechickensandotheranimals, haveagaincontributedtoKaiwaka’snolossstatus.

GrindlesaysAucklandersflockednorth after Covidandarestillmakingupto3040%ofall residential sales forNorthland.

DowninHawke’s Bay, Stuart Christensen,generalmanager with Tremainsforthecentral region,was alittle surprisedathisarea’snoloss suburbs,CliveandSaintLeonardsin HastingsandBluff HillinNapier.

Thesuburbshavevariedhouse types andpriceranges,andinBluff Hill, for example, $1mhomeswith aviewand sunwill sitalongside$600,000homes that don’thavea view orsun.

“It’saninterestinggame atthe moment. Thevendor’sperceptionofloss issimplypaperlossandnotactualloss.”

Wellington’s12 no-losssuburbsalso spanthecity,fromUpperand Lower Hutt andPoriruaCityto WellingtonCity. Hendersonsayspeoplewhobought inLowerHutt18monthsago whohave tosellwill be “inaworld of pain” but theyareprobablypeople whoprobably boughttownhouses andnew-buildsoffthe-planforsumsthe propertiesareno longer worthintoday’s market.

Some of the suburbs,like Cannons CreekinPoriruaCity andKilbirnie and NgaioinWellingtonCity, werevery under-valued fiveyearsago,hesays. Therehasbeensignificant gentrificationtaking placeinthe likesofKilbirnieandNgaiowitholder villas bought upandrenovated by youngerpeople.

Kelburn,one of Wellington’selite suburbs,isalsoonthelist.Sales over $2marenot uncommonin Kelburnbut HendersonsaysKelburnhadsucha massiveriseforittofallback20% matter.

ke themoneyandrun Dunedin,too,inthechillysouthofthe country,hadeightno-losssuburbsonthe list,althoughJoNidd,owner/principal ofNiddRealty,wascautious,saying Dunedin’ssamplesetsaresmallatthe bestoftimesandtherecanbe“funky” sults.

Perceptionsofloss

Oneofthesurprisesofthedatais Wellington region,whichhad12nolosssuburbsonthelist,eventhough Wellington’sbigpricehikesduringthe boomwerefollowedbybigfalls.

GrantHenderson, regionalgeneral managerforBayleys, saysduringthe boom averagehousepriceswereinthe $900,000sbutthathasfallentothelow $700,000s.

Even so,overfiveyears80 or 85% ofpeople wouldstillhavedonewell, hethinks.

Hesaysheseesvendorswhothink theyaremaking alossbecausetheir propertyisnotfetchingwhatitwould haveduringthegoodtimes,notrealising theyaresimplynotmakingtheheady gains made18 monthsago.

Allthesuburbsonthe OneRooflist–Abbotsford,Belleknowes,Corstorphine, Halfway Bush,Kaikorai, Maori Hill, Musselburghand Waverley– saw strong growthpriortothepullbackofthe market so it wouldbeexpected people whoboughtfiveyearsagowouldmake gains,butthat’strueofanysuburbin Dunedin,Niddsays.

“If you'dsaid18 monthsagoortwo yearsit's very unlikely anyofthose suburbswouldbe sittingabovewhere they were 18monthsagoatthat realpeak ofthe market.”

Shumpointsout thegainsmade are paperonesbecauseonceholdingand interestcostsare factoredin,it’sdebatable how much profithas reallybeenmade. Butthere willbemoreprofit-making to comefor onegroup of sellersthis year, hethinks.The five-year bright-linetest periodisupforinvestors whoboughtin 2018so there could be aspikeofpeople “takingthemoneyandrunning”now they cansellupwithoutincurring atax ontheprofit.

Lynmoreisoneof Rotorua’smost expensive andprizedsuburbs.

Photo /StephenParker

RIDINGTHEBOOMAND BEATINGTHEDOWNTURN

Theresearchpaintsapictureofsellerprofitsandlosses duringoneofthemosttumultuousperiodsforthe housingmarket,capturingthecatch-upintheregionspreCovid,thespikeinprofitsinthe18moznthsafterCovid,and thesubsequentslump.

Thenationwidemedianprofithitapeakof$362,000in 2021,attheheightoftheboom,whilethefirstthreemonthsof thisyearsawmedianlossatapeakof$70,000,almosttriple themedianlossin2018.

RealestatepainhasbeenmostacuteinAuckland,where thepercentagesellingatalossinQ12023was12.11%-up

NEWZEALAND

from3.93%in2022and0.84%in2021.

Christchurchhomeownershavedonethebestoutofthe boom-and-bustcycle.Pre-Covid,thepercentageofproperties sellingatalossinthecitywasabove10%.Thisdroppedto7% in2020,2%in2021,1.14%in2022and1.35%inQ12023.

HamiltonandWellingtonCityhave,likeAuckland,seen asharpuptickinlosses.InQ12023,thepercentageof propertiessellingatlossinHamiltonwas10.5%,upfrom2.5% in2022and0.33%in2021.ForWellingtonCity,thepercentage oflosseshasgonefromalowof0.4%in2021to6.82%inQ1 2023.

HAMILTON

AUCKLAND

QUEENSTOWN LAKES

CHRISTCHURCH

TAURANGA

DUNEDIN

WELLINGTON

guide to The

OneRoof selling property

BY DIANACLEMENT

Therecomes atimefor mosthomeowners whenthedayhas arrivedtopackup, selltheirhome, and moveontothenext stage in life.Forsome, their firsthome istoosmallfor agrowingfamily. Othersellerswillbetransferring to anew locationforwork,ora bettersuburbtheycouldn’tafford previously.Oritmayjustbe time to moveup thepropertyladderand growtheirequity.

Discoverwheretostartinthe sellingjourneywithOneRoof’s comprehensiveguide.

We’vecompiled aseriesofarticles coveringthehome-buyingjourney fromdreamto reality.

Thisguideexamineseverything fromthesellingprocesstomoving out.Findouthowtotimethesale, getthehouse ready,choose asales method,findtheright realestate agent,acceptoffers,gothroughthe settlementprocess,andmoveatthe endofthejourney.

1 16 OneRoof.co.nz

WHEREDOI START IF IWANTTO SELLMYHOUSE?

4

I

1Research the market youaresellinginto

Sellersdobestwhenthey understand localmarket conditions.

● Real estate agents can help you get familiar with the local area and what properties sell for.It’s best to get out and visit as many open homes as possible as well to get your own feel for what is happening in the market It will help give you arealistic assessment of how much your property will sell for and how long the sale process might take.

● Visit OneRoof.co.nz to seehow much properties in your area areworth as well as recent house-sold prices. It’s surprising how much you canlearn from the data available on properties.

● Property markets go in cycles according to supply and demand. Sometimes it’s easier to sell, and get abetter price, when thereare more buyers in the market than housesfor sale. That’s called a“seller’smarket” because it favours the seller

nthisguide, we shareour top tipsongetting thehouse selling process started, the stepsyou’ll needto take andsome of the most importantthings to consider If you’ve never sold ahouse before, thereisa learning curve to go through. The moreyou know in advance, the fewer surprises therewill be.At other times pricesmay fall or move sideways and thereare fewer buyers than sellers. That’s abuyer’s market. Think of the property cycle as aclock with the boom at 12pm, followed by aslide at 3pm, andthe bottom of the market at 6pm. That’s followedbya rising/hot market at 9pm and back to the top of the market at 12pm.

2Determine thevalue of your home

If you want to get thebest price for yourhome, youneed to know what it’sworth. Consider getting yourhouse valued so youwon’t be tempted to take alow-ball offer,and also don’t expect too much.House salescan fall through whenvendorsfail to accept realistic offers.

● OneRoofproperty estimatesare a good placetostart. They usedata from Valocity,and arebased on figures such as recent sales, council valuations and market trends.

● Realestateagent appraisals. A real estate agent can give you agood idea of what your home might sell for.Bylaw,they must be provided in writing, reflect current market condition, and be supported by comparable informationon similar sales in similarlocations.

● Registered valuation Aregistered valuer is aspecialist who justvalues homes.The valuer will visit the

property,know the local real estate market well, and have good knowledge of planning and building.

Valuation is not an exact science,but usually gives the most accurate indication of the price to expect for your property

Valuers areatarm’s length from asale and do not have vested interests aboutwho you list the property with and how much it ultimately sells for

Your real estate agent can adviseon whether to sell your property with an asking price, or use other methodssuch as auctions, tenders and deadlines sales with no set price. Even so, you will need to know how much you arewilling to accept to sell the home.

Bewareofexpecting too high aprice. If your price expectations aretoo high you may struggle to find abuyer.Sometimes the best offer is the firstoffer

Using areal estate agent with good negotiating skills is often the best way to achieve the sales price you want.

Preparing ahouse for sale and staging it can make it moreappealing to buyers and help create competition.

3Calculate thecosts of sellingyourhome

It usually costs tens of thousands of dollarstosella home in NewZealand. Mostofthosefeesaretakenout of the saleprice. They include advertisingcosts,

photography andvideography,repairsand maintenance, additional cleaning, staging, estate agent listing fees, aLIM (land informationmemorandum), auctioneer costs, conveyancing (legal) fees, moving costs, bridgingfinance if youbuy anew home beforeyou sell yourexistingone, and storage (ifnecessary)

If you don’t sell, youmay need to pay the cost of the marketing and advertising, and any legal fees you’ve incurred along the way

4Sell first or buyfirst?

If you’reselling to movehome, you must choosewhen to buy your new home. Selling your existing home first, then buying the next one can make sense. The other option is to find ahouse to buy then put your existing one on the market.

Should you sell your property before you buy the next one? Selling firstgives you peace of mind knowing you have the money from your existing home sale. The risk is you can’t findthe right home to buy you may end up renting for aperiod of time. If house prices arerising, this could be problematic.

Youmay only want to move if you find the right house. In that case you may want to buy first. Thereare mortgage

SOLD

implications to consider.Should you end up not selling your existing home as quickly as you anticipated, you may be left paying two mortgages. “Bridging finance” may be available for you if you end up in this situation. But it can be very costly paying two mortgages.Agood way around this is to include aclause in the sale and purchase agreement that makes the purchase conditional on the sale of your home first. Not all sellers will agree to this, especially in ahot market wherethey know they could sell their home to someone else.

5Hire agood real estate agent

It costs tens of thousands of dollars to sell yourhome,with areal estate agent. It can be temptingtotry to sell privately.Agents argue they achieve premium pricesand pay theirway

Choosing agood real estate agent could be the difference between selling and not, getting atop price, or just scraping in over reserve. Think long and hardbefore choosing to sell privately.Itcan work, but do you have the time and skills to do a good job?

6

Preparing your housefor sale

When you’reselling ahouse, great preparation will help your chances of finding abuyer and getting the best price Preparation pays off when selling ahome.You’ll need to declutter, depersonalise, and get ready for open homes. In some cases, renovation may pay off.Start by stepping back and viewing the home from abuyer’s perspective.Asking friends, family and real estate agents for honest input can really help. Do you need to renovate to sell? Never

assume youneed to do major renovations to sell. Take advice from local real estate agents about how muchthe renovation will add to the sale price.

Anew kitchen or bathroom may be what’s needed to sellata good price. On the other hand, it maynot recoup the money you invest. Buyers often like to add their own touches and prefer ablank canvas to ahome renovated to someone else’s taste. Sometimes elbow grease and decorating canadd proportionately more to the home’s saleability and the price.

Bear in mind renovations always take longer than expected. This will add time to the selling process so start early and give yourself as much time as possible.

7Market the property and hold open homes

Once youhave hired arealestate agent you will needtolistyour propertyand holdopen homes. Manysellers opt to stage their home

8Negotiateand accept an offer

The process ofreceiving offers from prospective buyers varies depending on the methodofsale. It is very important youunderstand the difference between offers made at an auction, deadline sale, multi offers andtenders as theyeach have their ownnuances.

9Exchange and settle

Once youaccept an offer on yourhome you begin theprocess ofsettlement

You’realmost therebut thereare still some hoopsto jump through!

Make sureyou understand the settlement process, especially presettlement inspections.

WHENIS TH TTIME TO SELLMYHO E?

Thebesttimetosellyourhouse dependsonwherewearein themarketcycle,the season and,of course,the reason why youareselling.

Whydoyou want to sell your house?

Therearelotsof reasonsKiwischoose toputtheirhomeon themarket tosell: outgrowingtheircurrentproperty,a changeinlifecircumstanceorevenjusta desiretomoveto somewherenew.Here aresomeof themostcommon reasons:

● Movingjobs. Ifyou’reclimbing thecareerladder,youmayneedto moveforjobopportunities.Ifit’sa permanent relocation,itmightmake sensetosellyourexistinghomeand buyafreshinthenewlocation.

● Gettingmarried or remarried. If you’retyingtheknot,yourliving arrangementsmightbechanging. With re-marriagesinparticularand blendedfamilies,peopleoftenneed abiggerhomeforallthechildren. Startingorgrowing afamily.The homethatsuitsyouas asingle orchildless couplemightbevery differentfrom afamilyhomesuitable forchildren.Starting afamilyis oftenthecatalysttomovefroman apartmentorflattoa homewitha gardenneargoodschools.

● Downsizing. Oncethe childrenhave flownthenest,parentssometimes wanttomoveinto asmallerhome. Thiscouldbeto releaseequitystored inthepropertyorto reducethe maintenanceandupkeep required.

● Approachingretirement. Planning for retirementmightinvolvemoving to anewlocationorbuying alower maintenancehome.

● Releasingequity. Peoplesometimes downsizetounlocksomeofthe capitalin ahometoliveonin retirement.

Whatisthe bestseason to sell your house?

Springistraditionallythebestseason tosell ahouse.That’snottosaythat other seasonsdon’t work.Withfewer propertiesonthe marketinautumn andwinter, thecompetitionis reduced andbuyersmaynotbeableto wait. Makesureyouunderstandlocal real estate marketconditionsbefore making

withthedesiretomoveandhavemore timeforhousehunting.Bachesandcribs sellparticularlywellinthesummer. Potentialbuyersoftenbrowserealestate agents’windowswheretheyarestaying atholidayhomes.Alwaysmakesureyou keepplantsandlawnswateredduring thesummermarketingperiod.

Autumn: Inautumnbuyersare oftenmotivatedtogetintotheirnew homebeforewinter.Thereisa certain charminfallingleaves,providingyou keepyourgutters,gardenandpaths clearandclean.In slowmarkets,the numberofpropertieshangingoveron themarketfromspringand summer mayincrease,whichmeansmore competition.

Winter: Thegreatadvantageofwinter isthelackofcompetition.Realestate agentswillhavefewerpropertieson theirbooks,sobekeentoselltheir listings.Buyerswhoneedto movehave asmallerpoolofpropertiestochoose from.Thepropertiesthatsellbestin winterarethosewithgoodnaturallight andgreatinsulation.Iftheproperty isdarkordamp,winterislikelyto accentuatethat.

Whatisthe property cycle? Howtheproperty cycleaffectstiming. Propertymarketsgoincyclesaccording tosupplyand demand.Thinkof itasa clock withtheboomat12pm,followed by aslideat3pm, thebottomat6pm, arising/hotmarketat9pmandback tothetopofthe marketat12pm. If youdon’tneedtosellwithin acertain timeframe,youmightwant towaitfor theboom.Itis,however,notoriously difficult to timethetopofthemarket. Ifyou’rerebuyinginthesame market,

quickly

Ifyouwanttosell yourhomemore quicklytakethese

steps:

● Declutterand cleanthehome

● Choosean agentquickly

● Priceit competitivelyto meetthemarket

● Stageitand marketitto appealtoawide rangeofbuyers, and

● Setashort settlement period.

thentimingthesale isn’tasimportant. Buyer’sand seller’s markets. Buyer’sandseller’s marketsareabout supplyanddemand. uyer’smarketis onewherethenumberof propertiesforsaleexceeds buyers.Buyersmaybeableto hissituation.Ina re fewerproperties forsale.Thismeansbuyersarecompeting idpropertypricesup.

Howlongdoesittake to sell your house?

Justhowlongit’sgoingtotaketo sellyour homedependsonanumberoffactors including timeoftheyear, whetherit’sa seller’sor buyer’smarket,andthe sales method youuse.TheREINZmonthly propertyreport recordsthemedian numberofdaystosell apropertybya realestateagent.Thisistypicallybetween 30 and40 days,withsomeregional differences.Ittakes timetopreparea propertyforsale,whichisnotincludedin thesefigures.

Preparingahouseforsale Preparingahouseforsalecantakemonths. Even onceyou’reready tolist, expectto spend amonthchoosing anagent, signing alistingagreement,havingtheproperty staged, gettingphotosandvideostaken, andmarketingmaterialprepared. Once thesignboard is up,the marketingperiod isusuallyfourtosixweeks. Ifthehome islistedfornegotiationoradeadline sale it canbesoldat any timefromdayone. Ifit’sbeingsoldbyauctionor tender,the salewillmostlytakeplaceattheend of themarketingperiod,providingthere is abuyer.Oncethesaleandpurchase agreementissignedandtheoffergoes unconditional, atypicalsettlementperiod before themoneychanges hands andthe keysarehanded overisthreetosixweeks. Thecommonfactorsthataffectspeedof saleincludethedesirabilityofthehome andthearea,availabilityofmortgages, propertycondition,price, methodof sale,whetherit’s abuyer’sor aseller’s market,thenumberofpropertiesonthe market,andanyissuesthebuyer’slawyer findswiththeLIM(landinformation memorandum) or propertytitle.

WHAT ARETHE DIFFERENT WAYS TO SELL AHOUSE?

Thereare fourmainmethods ofselling ahomeinNew Zealand:negotiation,auction, tenderanddeadlinesale.Your realestateagentwillhelpyouchoosethe bestoption.

Auctionsarea popularwaytosell propertyinNewZealand.Butthey’renot theonlyoption.Youneedtounderstand howthedifferentsalesmethodswork inordertochoosethebestforyour property.It’soneofthefirststepsto sellingyourhome.

Common methodsof sale in NewZealand

● Auctions: Auctionspitbuyers againsteachotherin acompetitive environmentandcan resultina quicksale.

● Negotiation: Negotiationopensthe saleuptobuyerswhohaveconditions suchasfinanceor abuilding report whocan’tbidatauction.

● Tendersanddeadlinesales: Tenders anddeadlinesalesaremoreprivateand encouragebuyerstomaketheirbest offerfirstbecausetheyusuallyonly haveonechancetogetthepriceright.

1Auction

PROS AND CONS

Auctionspitbuyersagainsteachother Theybidthepriceupuntiltheypassthe reservepriceandonewins.Auctionsare oneofthemostpopularmethodsofsalein NewZealandbecausetheyoftenresultina quick,unconditional(cash)sale.Sellersand agentslikeauctionsbecausetheycreatea senseofurgency,andbuyerssometimes paymorethantheymighthavewithout thecompetitionofotherbidders.Winning biddersarecommittedtopurchasethe property.Iftheauctiondoesn’texceedthe reserveprice,theauctioneerwillnegotiate withthehighestbidder. Watch outfor:

● Thehomemaynotsellatauctionif thereisonlyonebidder,orthe reserve priceistoohigh.

● First-homebuyersareoftenlocked outbecausebanks requireconditions suchasgetting registeredvaluations ontheproperty.

● Itcanbemoredifficult togettheprice youwant,ifbuyersareawareofthe pricethepropertyhaspassedinat.

● Ifthe reserveistoolow,youmay selltoocheaply.

2

Sale by negotiation

PROS AND CONS

Withanegotiatedsale,buyersmakeoffers viatherealestateagent.Youcounter-offer untilapriceisagreed.Propertiescanbe offeredforsalewithorwithoutafixed price.Somenegotiatedsalesstartwith “offersover”acertainfigure.It’squite commontoturntonegotiationandputa priceonthepropertyafteritfailstosellby othersalesmethods.

Watch outfor:

● Itcanbehardto picktherightpriceto marketthepropertyat.

● Iftheaskingpriceistoohigh,buyers maynotcomeforward.

● Withno fixedauctionortenderdate, thesalecangetdrawnout.

● Buyersarenotsubjecttothesame urgencyasanauction.

● Whenpricesarelisted,buyersmay assumethehousefailedtosellby othermethods,encouragingthemto makelowoffers.

3Tender PROS

AND CONS

With atender,buyersareinvitedto submitformalwrittenoffersbeforea deadlineandprovide a10%deposit, whichis refundedtounsuccessful bidders.Thepropertycanbelisted “forsalebytenderunlesssoldprior”, meaningthesellercanacceptoffers early.Thesellerhasfiveworkingdays afterthetenderclosestochoosewhich offer,ifany,theywanttoaccept.The vendorcanchoosetonegotiatewiththe buyerwhoseofferisaccepted,should thebuyeragree. Tendershavespecific saleandpurchasetermssetoutinthe ADLS/REINZSale &Purchaseby Tenderagreement.

Watch outfor:

● Ifbuyersareunawareofwhatthe competitionispreparedtopay,they mayofferlowerpricesthanatauction.

● Somebuyersmaybeputoff because theyhavetopay a10%depositwith noguaranteeofwinning.

● Ifthepropertydoesn’tsellat tenderyoucouldendupin along negotiationprocess.

● Buyersmaymissthetenderdate.

4Deadlinesale

Adeadlinesale(AKA“deadlinetreaty” or“private treaty”) ishalfwaybetweena negotiatedsaleand atender.Theproperty ismarketedwithoutanadvertisedprice andbuyerssubmitconfidentialoffersbya fixeddate.Theseller choosesbetweenthe offers,butisnotobligedtoaccept them. Unliketenders,youcanacceptanoffer andsellpriortothedeadlinedate.Thisis agoodoptionwhere thepriceisuncertain. Akeyadvantageof adeadlinesaleis you don’thavetosticktoallthetermsand conditionsofatender.

Watch outfor:

● Buyersarenotsubjecttothesame degreeofurgencyasinanauction.

● Thesaleprocessisoftenlongerthan anauction.

5Othersales methods

● Multi-offer process. Where thereis morethanoneofferon aproperty bynegotiation, a“multi-offer”sale takesplace. Thisencouragesbuyers tomaketheirbestoffer.Thevendor canchooseanofferbasedonprice, conditionsorotherfactors,orto negotiatefurther.Realestateagentsare requiredbylawtotreatallbuyersfairly. Findoutmoreaboutmulti-offersales here.Findoutmore aboutthebesttime tosellyourhouse.

● Mortgageesales. Ifhomeowners defaultontheirmortgagepaymentsthe bankwilleventuallyselltheproperty to recoverthemoneyitisowed. Buyerssometimesget abargainwith mortgageesales.Butthereare risks thattheformerownerwilldamagethe propertyor removefixturesandfittings includingbathroomsandkitchens.

6Sole agency or multi-agency?

MostpropertiesinNewZealandare soldbyone realestatecompany exclusively(AKA“soleagency”).Ifyou choosetohavethepropertysoldby multipleagencies(“multi-agency”or “generalagencyagreement”)yousign agreementswithmorethanone.The advantageofsoleagencysalesisthat agentssaytheyworkharder,knowing onlytheycanselltheproperty.Onthe otherhand, amulti-agencysaleputsyour propertyinfrontofmorebuyersintheory andtheagenciesmaycompeteagainst eachotherforthesale.

Yourhome,themarketandyourcircumstanceswillalldeterminewhichmethodisbest.

CHOOSING AREAL ESTATE AGENT TO SELL YOUR HOUSE

Choosing agood realestate agentcouldbethedifference betweensellingandnot, getting atopprice,orjust scrapinginover reserve.Thinklong andhardbeforechoosingto sell privately.Itcanwork,butdo youhavethetimeandskillsto do agoodjob?

● RealestateagentsinNew Zealandneed alicence fromtheRealEstate Authorityandmustadhere to astrictsetof rulesto adhereto.

● Theyknowyourmarket,have buyersontheirbooks,andare trainedinnegotiationandsales skills.

● Theagentworksonbehalfofyou, notthebuyer.

● Sellingprivatelycansave commission,butis alotofwork.

● ThevastmajorityofhomesinNew Zealandaresoldusinga realestate agent.

Realestateagentsaresalespeople whosejobitistosellhomes.Agents advertiseandmarket yourproperty, andtheynegotiatewithpotential buyers.Agoodagentwillhelpyou withstrategy,presentation,marketing, pricing,buyerengagementand negotiation.Realestateagentsmust have agoodknowledgeoftheReal EstateAgentsActand alonglistof other relevantlaws.

1Howtochoosea real estate agent

Mostsellerschooseagents,ratherthan theagency theyworkfor.Butit’sworth investigatingtheagency’strack record inthelocation you’reselling in,and to consider itsfees.

Allagentswilltellyouthey’re the best.Askfriendsandneighboursfor recommendationsofagentstheyhave used.Yourquestionsshouldinclude iftheagentcreated agoodmarketing plan,ishonestandprofessional, agood negotiator,communicatesfrequently, anddoesn’tpressuresellers.

AlwayschecktheRealEstate Authority’spublic registertoensure theagenthas acurrentlicence.The registeralsohighlightsanydisciplinary actionagainsttheagentinthepast.

Onceyouhavedonethat,createa

shortlisttheninterviewthe agentstoseeifyoucanworkwiththem.

2Howmuch do real estate agents charge?

Itcancostmorethantheprice ofabrandnewcar to sellyourproperty.Most charge tieredcommissionsaskingfor an initialcut onthefirst$300,000,forexamplesuchas 3%to 4%,thenalowerpercentage,such 2%,overthat.

Someagentschargefixedfees.You cannegotiatetheagents’rates.Beaware thatsomeagenciesincludecostssuchas marketing,advertisingandauctioneer inthecommissionpackage. Withothers youpaythisinadditiontotheagency commission.

MostKiwisusuallychooseoneagency toselltheirhome.Ifyourhousedoesn’t sellafterthemarketingperiod,youmay chooseto switchagents,orevenopenup thesaleto amulti-agency.

3Sellinga houseprivately

Thereisnothingstoppingyoufrom listingyourhomeforsaleprivately.

Youcanputyourownsignboardup, advertiseonprivatelistingssites,doyour ownopenhomes,andnegotiate/sign withthebuyer.

Youwillstillneed alawyer.Many privatesalesarebetweenpeoplewho alreadyknoweachotherorfamily members.Inthatcasethesellerdoesn’t needtodomarketingandnegotiation. They’reeffectivelysellingtheirown properties.

Fewerpeoplemarkettheirproperty privatelythanthestatisticssuggest becausea)thenumbersofhomessold “privately”areskewedbynewhomes soldbydevelopers,whichfallunderthe privatesalecategory,becausedevelopers donotneed arealestatelicenceandb) salesbetweenfamilymembers,divorcees andothers,wherebothpartiesknoweach otherarerecordedasprivatesales.

Havingtheright realestateagentcanmakeallthedifference.

HOWTO PREPARE YOUR HOUSEFOR SALE

Whenyou’resellinga house,greatpreparation willhelpyourchances offinding abuyerand gettingthebestprice.

Gettingstarted

You’llneedtodeclutter,depersonalise,andget readyforopen homes.Insomecases, renovation maypayoff.Startbystepping backandviewingthehomefrom abuyer’sperspective.Asking friends,family andrealestate agentsforhonestinputcanreally help.

Importantthings

to know:

● Renovationscanpayoff,butthey don’talways.Seekadvicefrom realestateagents,andgetquotes beforestartinganywork.

● Alwaysmakesure yourhomelooks itsbestfromthestreet.Youdon’t wantpotentialbuyersleavingbefore theystepthroughthefrontdoor.

● Focusonthethingsthatgiveyou thebiggestbangforyourbuck. That’sjobssuchasdecluttering,depersonalising,cleaning,touch-ups andstreetappeal.

● Trynottogettooemotionally attachedtoyourhome’sexisting look.Ifyourhomestagerthinksyour décorisdated,accepttheadvice.

Sitdownandwrite ato-dolistof everythingyouneedtodoandadd deadlinesforeach.

1Declutter

Havingtoomuchstuff in ahome makesitlooksmallandsometimes undesirable.Youwantbuyerstosee yourhome,notyourbelongings.Buyers lovestorage room,and adecluttered garageorloftwillappeal. Don’ttryto hidetheclutter.Buyerstendtoopen drawersandifthey’rejam packedit will givetheimpressionofnospace.A declutteredhomeaddsjoy.

Youneedto removepersonal itemssuchasphotos,toys, sporting equipment,excessclothes,andeven fridgemagnets.Sell,donate,orstore theseitems.De-personalisingalso means replacingeclecticitemswith neutraldesigns.

2Deep clean

Makeyour homesparkle.Clean it insideandoutto withinan inchof its lifebeforeitgoeson the market.Smells suchas petsandoldcookingarea turnoff topotentialbuyers. Improvestreetappeal.Lookatyour propertyfromthe road.Somebuyers won’tevenwalkiniftheentrance looks run-downorthegardenismessy. Fixbrokenfences, replacetheletterbox ifit’sold,paintthefrontdoor,remove ortrimoversizedplants,andloadup gardenbedswithfreshbark.Quality pottedplantsoftenliftthelookofthe exteriorandentranceway.

3Touch-ups

Although afullrenovationmay not recoupitscost, atouch-upwill oftenhavea good returnoninvestment andcreatesgreatfirstimpressions. If youcan’taffordallthework,focuson themostimportant roomssuchas the loungeandkitchen. Whattofixin ahouse before selling Doallthelittle repairjobsyou’ve

beenputtingoff foryears.Ifbuyersgo toopenwindowsto find themstuck, seeevidenceofdrippingtaps,or findkitchencupboardshanging loose,they’llgettheimpression thatthehomehasn’tbeenwell lookedafter.Simplejobscan addvaluetoyourhome,butlarge repairjobssuchas replacing worn-out roofsmay makeeconomic sense.

Whatnot to fixwhen sellinga house

Don’tgocrazy andtrytotackle everything.Also don’tstartlargejobs thatyou knowyou can’tfinish.Unfinished workmaylookworse tobuyersthansimply leavingthe work.

Isit worth renovatinga house before selling?

Manysellersareconvincedtheyneedto renovatetoget thebestprice. That’snot always the case.

Quiteoftenfullkitchenandbathroom renovationsandextensionsdon’tpayfor themselves.Major renovationscanpusha homeinto ahigherpricebracketthatnot allcanafford.Orbuyersmaywanttobuy theworsthousein agood streetandpay for renovatingtotheirowntaste.

Beforegoingdownthe renovation route,create adetailedspreadsheetand thinklongandhardabouttheprosand cons. Takeadvicefromyourestateagent, mortgageadviser(broker)andother professionalssuchas valuersandquantity surveyors.

Itmaybethatsimplepainting,decorating, andgardeningisallyouneedtodo.

Whatthings areworth renovatingtomakeitmore likelyyou willsell and/or add themostvalue?

Unlessyouhavelimitlessmoneythe questionofhowmuchdoesitcostto renovatearises.Your realestateagentcan makesuggestionsbased onwhatbuyers lookforinyourmarket.Askyouragent

Presentationiscrucialwhenpreparingyourhomeforsale.

whattorenovatebefore sellingifyou’re notsure.

● Interior: Acoatof freshpaintandupto-datecoloursboth insideandoutsidecan make ahugedifference to ahomesale.Itmakesthehomelook modernandsmellfresh.Coloursdate quitequicklysomakesureyouchoose up-to-datecolours.

● Kitchen: Take agood lookatthe kitchen.Ifyoudon’twanttoputa newkitchenin,considerupdatingthe cabinetdoorsandhandles,splashback, benchtop,andappliances.Freshpaint alsoaddsvalue.

● Bathroom: Likethekitchen, anice bathroomhelps sellaproperty.But sometimes anewbathroomvanity, andupdatedcoloursareallyouneed todo.Thinktwicebeforeripping outandmovingtheexisting fixtures. That’sexpensive.

● Exterior: Considerpaintingtrims, and/ortheentirehouseifnecessaryif itlooksshabby.Fixfences.

● Garden: It’sessentialtotidythe gardenwhenyouareselling, especiallyatthefront.Mowthelawns regularlyandedgeallthepaths.Get atreesurgeontotopallthetreesand consider removingovergrownshrubs and replantingwithsomethingmore fashionable.

Howtostage ahouse forsale Homestagingsells.Itinvolvesreplacing yourfurniture and accessorieswithstylish onestodress upthehomewithanice modernlook.

Homestagersareusuallyinterior decoratorsandhave awarehouseof furnitureandotheritemsthatcan makeyourhomelook amilliondollars. Typically,thestagingwillstayinplacefor thedurationofthemarketingperiod. Stagingappealstobuyer’semotions. Theyseeahomethey’dlovetolivein. Evenahomeinneedofatotaldo-uplooks awholelotbetterwithstaging.Ithelps buyersimaginethemselveslivingthere. Homestagingisusefulinallmarkets, butespeciallyin abuyer’smarketto makethepropertystandoutfromallthe othersbeingsold.

Mosthomeownersemploya professionaltodotheirhomestaging. Asklocalsoryour realestateagentfora recommendation.Sellerswithimpeccable tasteandtimeontheirhandscandoit themselves.

Orifyoualreadyhavenicefurniture,

thehomestaging companywillkeepthe bestofyouritemsandsupplementthem withwhateverisneeded.

DIYhomestaginginvolvesdecluttering andde-personalisingandthendressing thehometoappealtopotentialbuyers. Thenit’s amatterofusingstylishmodern furniture,furnishingsandothertouches. Youmightwanttohirefurniture,orshop foritemsthatyoucouldtakewithyouto yournewhome,orsellon.

Stagingforanaveragehome costs around$3000,buttypicallypaysforitself. Forhigh-endhomes,however,theprice couldbeasmuchas$10,000to$15,000.

Howtoprepare

foranopenhome

You’rereadyfor open home,and now youneedto:

● Cleaneverysinglecornerofyourhome. Youmightwanttoget aprofessional cleanerinbeforeeachopenhome if you’restilllivingthere.

● Openeverywindowtoairoutthe roomsfor acoupleofhours.

● Opencurtainsandturnonthelightsif necessarytolightentheplaceup

● Switchonheatingorcoolingtomake thetemperatureappealing.

● Removepersonalitemssuchaspyjamas, toothpasteandshampoobottles.

● Takeyourpetsoutfortheday.

● Considerbuyingsomeflowersifthe agentorhomestagerhasn’t.

GENTLE BREATHING. That’s thesoundof a fixedpricebuild.

YOU’VE SOLD YOUR HOUSE

WHAT HAPPENSNEXT?

Theprocessisn’toveroncethe hammerfallsor asaleprice hasbeenagreed. Welcome tothebusinessendof sellingyourhome, aperiodinwhich you’llbecompletingpaperworkin betweenpackingupyourbelongings andplanningyournextmove.Below, we’llwalkyouthroughnotonlythe saleprocessbutalsowhatcomesafter, includingsettlement.

Acceptinganoffer on your property

Theofferprocess variesdepending onthemethodofsaleyouuse.At anauction, thehighestbidderwins, providingthe reservepriceis reached. The‘offer’isunconditional.Youdon’t needtoacceptthe firstoffer,orlower your reserveat auction,unlessyou choose to.However,astheoldadage goes,thefirstofferisoftenthebestoffer. Fordeadline salesandtenders,offers areprovidedinwritingandyoucan choosewhichonetoaccept,ifany.

During anegotiation,theprospective buyercanmakeanoffer andtheseller canmake acounter-offer.Thisprocess continuesuntil apriceismetthatis acceptabletobothparties.

Importantinformation

● Ifyouhaven’tyetappointeda solicitor,nowisthetimetodoit.

● Offerswillusuallybepresentedto youon asignedsaleandpurchase agreementalreadysignedbythe buyer.

● Youdon’tneedtoacceptanoffer.

● Wheneveryouarenegotiatingwitha prospectivebuyer,youcancounterofferviathe realestateagentatany timetoattempttogetthebuyerto offermore.

● Buyerswillofteninclude anumber of‘conditions’aspartoftheiroffer. Ifthereare conditionstherewillbe aperiodoftimewithinwhichthey mustbemet.Oncethatdatepasses thecontractgoes“unconditional”, meaningthereisnowayforthe buyertobackout.

● Beverycarefulifyou receiveanoffer fromanagentorhis/her relatives. Agentsarerequiredbylawtobe transparentaboutanyconflicts ofinterestandmustprovidean independentvaluationattheir cost.

Understanding

thesaleand purchase agreement

Thesaleand purchase agreementisa legally bindingdocument thatoutlines thepriceandconditionsof asale.In NewZealandmostagreementsare basedon theADLS/REINZSale& PurchaseofProperty agreement. Evenso,thereare manydifferent clausesthatcanbeincluded,which meansyoushouldalwaysarrangefor yourlawyerto reviewthedocument beforesigning.

Salesbytenderorauctionusea differentversionoftheADLS/REINZ agreement.Developerssellingbrandnewpropertiesoftenhavetheirown bespokeagreement.

Theagreementshouldinclude:

● Theaddressoftheproperty

● Thenamesofthebuyersandthe sellers

● Thesaleprice

● Anyconditions(suchassubjectto financeorbuilding report)

● Whathappensif conditionsaren’t met

● Anychattelsincluded in thesale

● Thedeposit requirements

● Datesthattheagreementwillgo unconditionalandthe settlement date

● Thefinancialpenaltiesforfailingto settleontime.

Whathappens afteryou accept an offer?

Onceyou agreeonthepriceandany conditions,yousignanddate thesale andpurchaseagreement.Onceyousign thesaleandpurchaseagreementyou can’tback outunlessitrelatesdirectlyto aconditioninthedocument.

Makesureyourlawyerisinvolvedat

SOLD SOLD

thisstagetoavoidhiddensurprises. Atthisstage, a10%depositisusually paidintothe realestateagent’strust account.

With atender,however,thedepositis paidwhenthebuyermakesanoffer.The depositis returnedifthetenderisnot successful.

Sometimesbuyersnegotiate alower depositsuchas5%or alater datefor payment.Evenduringanauctionbuyers can seeka “variation”for alowerdeposit thantheusual10%.

Afterthesaleandpurchaseagreement is signedanddatedbybothparties,there is aperiodoftime(suchassixweeks) from“exchange”(ofcontract)until “settlement”.Settlementisthedaythesale goesthroughandyou receiveyourmoney.

Whatsellers shouldexpect during thesettlementprocess Alotgoesonduring thesettlementperiod. Settlementisthelegalprocessof transferringthepropertytothenew owner.Thekeylegalstepstoward settlementare:

● -Exchangingcontracts.Thismeans bothpartieshavesignedthesaleand purchaseagreement.

● Thedepositispaid.

● Going“unconditional”whenany conditionsofsalearefulfilled,after whichneithersidecanpull out.

● Apre-settlementinspectionbythe buyertoensurethehomeisinthesame conditionasitwaswhenthecontract wassigned.

● Settlementday,whenthepropertytitle, moneyandkeyschangehands.

Whathappens duringthe settlement period?

Yourlawyerwillhandlemuchof the settlementprocessonce youhave exchangedcontracts.It’sthelawyer’sjob todealwithissuesrelated toconditions andtheprocess ofsettlementday,butwill contactyouiftherearedecisions to be made.

Howlongdoesittake to settle?

After“exchange”,thereisusuallya periodoftimesuchassixweeksuntil “settlement”.Sometimesit’smuchshorter or it canbelongersuchasthreeorsix months.Thelengthoftimeisdownto whatyouandthebuyeragree to.

Yoursellingjourneydoesn’tendonceyou’veacceptedanofferonyour home.

Pre-settlement inspection

Inbetween exchangingcontractsand settlementday,the buyer willdo apresettlementinspection.That’stoensure thatthe homeis inthesameconditionit waswhenthecontractwassigned.

Ifthereare anydefectsthatwerenot presentwhenthecontractwassigned,the buyermay request:

● Repairsaremadebeforesettlement

● Areductioninthepurchasepriceto coverthecostofdoingthe repairs themselves,and

● To retain someofthesaleproceeds(the amountbeingagreedbybothparties) tobepaidpost-settlementafterthe repairshavebeencarriedout.

Whathappens on settlement day?

Settlementisthedaythesalegoes throughand themoney changes hands. Alothappensonthisday,butyourlawyer doesmostofthework.Your lawyerwill liaisewiththe otherlawyertoensureany issuesare resolved.

Ontheday, thebuyer’slawyerpays thepurchasepriceintoyourlawyer’s trustaccount.Yourlawyer repays (discharges)themortgageonyour behalf,andpaysoutthe realestate agent’sfeesandother“disbursements” (costsorexpenses).The remainderis transferredtoyou,orifyou’rebuying thesameday, to athirdlawyer.

Oncethemoneyhasbeen receivedyour lawyerwill releasethedocumentation electronicallytothebuyer’slawyerwho willsubmitthedocumentationto Toitū Te WhenuaLandInformationNewZealand (LINZ)to registerthetransferofthetitle tothenewowner.

Oncethisisalldone,your realestate agentwill releaseyourkeystothenew buyer.Sometimesit’s averylongday, withsettlementnothappeninguntillate afternoonorevening.

Moving out Ifyouhaven’talreadydoneso,youmove outonsettlementday.Sometimesit’sless stressfulifyoucandothisinadvance. Amongthetasksyoushouldcompleteare:

● Takingmeter readingsbeforeyou leaveandcancelcontractswiththe utilitiescompanies.(Yourlawyerwill informthecouncilandwatercompany thatyouhavemoved.)

● Changingyouraddresswithyour bank,IRD,council,insurance companiesandanyothercompany thathasyouraddressonfile

Do youpay taxwhenyou settle? Ifso,when?

Owner-occupiersrarelypaytax on propertysales. Usuallywhen taxdoes needtobepaidonthesaleproceedsofa homeit’sinvestorswhoarecaughtbytax rules.Eventhen,notallinvestorsneedto paytax.

Themostcommonsituationwhere sellersneedtopaytaxontheirgains isas aresultoftheInlandRevenue Department’s“bright-line”rule.That appliestoinvestorsmainlywhohave investmentpropertyforlessthanthe numberofyearssetbythebright-line rulewhentheysell.Owner-occupiers whohaveneverlettheirhometo tenantsareexempt.

If,however,thepropertywasletforsome ofthetimeitwasowned,itcouldbe subjecttothistax.

Property traderswhosebusinessis buyingandselling homes payincome taxon theirgainseven aftertheend ofthebright-lineperiod.Inrare circumstancesowner-occupierswho show apatternofbuyingandsellingto make aprofitgetcaught by the trading ruleorthebright-linetest.

Theothertax rulethatoccasionally catchesowner-occupiersistheassociated persons rule.Inshort,ifyou’reclosely associatedwith apropertytrader, developer,orbuilder,yourproperty salesmightbesubjecttoincometax. Associatedusuallymeansmarried, relatedto,orinbusinesswith.

Whatifmypropertydoesn’t sell?

Someofthecommon reasonsproperties don’tsellafterthatorbynegotiation/ tender/deadlinesaleisbadtiming, they’reoverpriced,in apoorstateof repair,verydated,ortoopersonalisedto theexistinghomeowner’stastes.

Ifthepropertydoesn’tsell,youneedto considerifthepriceisrightforthecurrent market.Ifyoucanwait,takeitoffthe marketuntilnextseason.Itmaynotbethe righttimetosell.Orperhapsyouhaven’t chosenoneofthebestwaystosellyour house.Youcanchoosetorelistwithanother agent.Beverycarefulofpayingdouble commissionsifyouarenotoffthehook fromthelastcontract,orselltoabuyerwho wasintroducedbythefirstagent.

BUYERS’

First-home buyers should act now, or they could find themselves waiting along timefor abrand-new apartment, say specialists. DIANA CLEMENT reports on the state of the new development market.

HE SUPPLY of new apartments is likely to dry up over the next few years as financing woes and atepid housing market take their toll on developers.

Apartment specialists told OneRoof that the new-build sector was feeling the squeeze as aresult of the market downturn, and warned buyers that new stock could be become scarce as developers put projects on hold.

Suzie Wigglesworth, national projects director at Bayleys, said the new development market for anything other than highend apartments was tough right now.“Wherethe developers arestruggling alittle bit is at the medium to lower end [of the market].Alot of those projects have been placed on hold, pending the market improving,” she said.

Anumber of apartment developments arestill proceeding, though, including TLC Modular’s Elevation project inAuckland’s Northcote, which Bayleys is bringing to market.

The development consists of ready-made pods, which areshipped to New Zealand from their manufacturer in Vietnam and then craned into place. Wigglesworth said the project was close to completion and she noted that sales and visits to the show home in the last six weeks had picked up.

“It’s getting closer to completion. Buyers have been on the journey with us for avery long time. Lots of them have been to see us numerous times, and arenow in aposition to actually purchase. So, it’s starting to get some real traction.”

One of the factors holding back newdevelopments has been the rapid escalation in construction costs coming at the same time as falling house prices, meaning costs can’t be passed on. However, Wigglesworth said, construction costs have started to plateau.

“Concrete is still fairly up there. But for timber,for example, costs havestarted to decline. So, it depends on what it is that you’reconstructing it out of,” she said.

Colliers national director Pete Evans said the stalling of new projects meant therecould be alag of up to three years for new stock to become available.

Colliers is marketing inAuckland the Domain Collection, aprestige development on Carlton Gore Road, in Newmarket, which is about 70% sold; Elementum, amid-market project in Long Bay; and the Onehunga Mall Club, in Onehunga. Beyond that, new apartment projects have all but dried up, Evans said.

“The hardest thing for developers is the

traditional finance model. Theymight buy asite, do their feasibility,take it to market [and] try to get 60% of itsold. Then they’ll go to abank with awhole heap of contracts. The bank will fund the construction and it gets built.”

Currently,however,most developers can’t get beyond feasibility,let alone get the sales. “So, we’re just seeing supply justdrying up. New supply is almost non-existent.”

Evans said the current lack of activity in the apartment development market was likely to delay construction of the next wave of apartments by about three years. “It’s only acouple of developers who don’t need all those things in place who say,‘OK, now’s the best time to go and actually buy land at the right price’,” he said.

Evans said that buying was best when the market was flat, as it was now.“At the moment [the market] certainly is very close to the bottom, if not at the bottom.”

Developer Martin Cooper,ofCooper &Associates, said materials inflation had been an issue for his build of One Saint Stephens apartments in Parnell. New buildings after this one would cost more, he said.

Like other apartment specialists, Cooper hasseen interest in sales start to pick upagain over the past six weeks. He said 22 of the 27 apartments at OneSaint Stephens weresold. “Thereisquite abit of life in the

“WE’RE JUSTSEEINGSUPPLYJUSTDRYING UP.NEW SUPPLYISALMOSTNON-EXISTENT.”

COLLIERS

DIRECTOR PETE EVANS

The Onehunga Mall Clubisa newapartment development under construction in Auckland’sOnehunga.

Photo /Fiona Goodall

marketnowthatconstructionisunderway.”

Hefeltthatpotentialapartmentbuyerswouldbe takingnoticeoflastmonth’sannouncementbythe ReserveBankofNewZealandthattheOfficialCash Ratehadhititspeak,at5.5%.“They’llbethinking,‘If themarketisgoingtobethesameforthenextcouple ofyears,thendo Iwanttowaittwotofouryearsto thenmake adecision?Oram Ijustgoingtogetonwith itnow?’ Ithinkthere’sanelementofthatcominginto playinthemarket,”hesaid.

Coopersaidthatnewsupplywouldalsotighten. “That’sacrosstheboardfrombothaffordableand luxury.Ifyou’renotbuyingsomethingnowthat’s alreadyunderway,youcouldbewaitingtwotofour yearsbecauseit’sgoingtotakethatlongforthe capacitytocomethrough.”

CBRE’sassociatedirector research TambaCarleton saidthenumberofbuild-to-rentprojectsforsocial housinganddeveloper-heldinvestmentwasequalto thenumberofapartmentbuildingsdestinedfor theopenmarket.

HEYMUMS &DADS

“Thisdataisindicativeofone wayinwhichdevelopersmight beabletomoveforward andfinancetheirbuilds, awaytostayactive,” shesaid.

Theconstructioncycle hashitthebottombut build-to-rentapartment developmentsdon’t requirepre-sales.“In thefirstthreemonthsof 2023,wesaw 61projectsacrossforsaleandnon-saleable sectors,whichcompares withthelastquarter of2022,whichshowed 73saleableversus58 non-saleable[projects],” Carletonsaid.

“Itisinterestingtosee thenon-saleablesectorgrowingby anetofthreeinthe lastquarter,whichinourviewisindicativeofpeople startingtoseethepathwayaheadofthem,particularly asthenumberofKāingaOraprojectsholdsteady[33in Q42022,and35inQ12023].”

Thelasttimetherewere61saleableprojectsinthe pipelinewasinQ42014,saidCarleton.Atthatpointin timetherewereonlyfournon-saleableprojects.

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Anartist’simpressionoftheinterior oftheElementum apartments,in LongBay,Auckland.

Photo /Supplied

DeveloperMartinCooperonthe scaffolding overlookingthebuildofa newapartmentdevelopment at One SaintStephens Avenue,in Auckland’s Parnell. Photo /JasonOxenham Anartist’simpressionofTLC Modular’s Elevationprojecton Lake Road,inNorthcote,Auckland.

Photo /Supplied

winterwill remain achallengeassalesandlistingsvolumesshrink.

Thereare signsthatthedownturn isbottomingoutforhomeowners, withthelatestfiguresfrom OneRoofshowingvaluerises inthree regionsandtherateof declineslowing inothers.

NewZealand’saveragepropertyvalue fell2.3%($22,000)to$950,000inthethree monthstotheendofMay,as successive interestraterisesputdownwards pressureonsales,accordingtothe OneRoof ValocityHouse ValueIndex.

Northland,Otagoand WestCoastwere brightspotsinwhathasbeen atough autumnmarket.Allthree regionsenjoyed liftsintheiraveragepropertyvalue, with WestCoast recordingthehighest quarterlyvaluegrowth,at2.9%.

Therateofvaluedeclinehasslowedor evenplateauedinsome regions,including Canterbury, Taranakiand Wellington,but thefigurespointtoworseningmarket conditionsinothers.

Overthelastthreemonths,therate ofvaluedeclineacceleratedineight regions,withBayofPlenty,Hawke’sBay (still reelingfromthedevastatingimpact ofCycloneGabrielle),Marlborough, NelsonandSouthlandhardesthit. All five haveseentheirrateofdecline almost double.

Thefiguresalsohighlightedcontinued uncertaintyinthecountry’sbiggest housingmarket.Auckland’saverage propertyvaluedropped3.2%($43,000) overthequarterto$1.291million,but therateofdeclinepickedupinApril

COSTOFTHEDOWNTURN

andMay,suggestinghousepricesinthe regionhavestill awaytogobeforethey hitthebottom.

Ofthecountry’s72territoriallocal authorities(TLA),just14sawvalue growthoverthequarter,including Dunedin(up1.7%to$654,000)and Queenstown(up0.6%to$1.918m). However,thebestperformingTLAsover thequarterwerelower-valueareaswith lowsalesvolumes.

Housevaluesinall72TLAsareupon pre-Covidlevels,butthedownturnhas eroded alotofthegainshomeowners enjoyedduringtheboom,with WellingtonCity’saveragepropertyvalue, at$983,000,only7.1%($66,000)above whereitwasinMarch2020.

Thelatestindexfigurespointto continuedvolatilityinthemarket throughoutmuchofwinter,withthe drop-off insalesandnewlistingsandthe increaseintheOfficialCashRatelikelyto squeezepropertyvalues.

WayneShum,senior researchanalystat Valocity,saidnationwidesalesvolumesin thethreemonthstotheendofMaywere downnearly38%year-on-yearanddown morethan50%onthesamequarterfive yearsago.

“Thelargestdeclineswereinmetro areaswhereaffordability remainsa barriertoentry.Whilefirst-homebuyers haveincreasedtheirshareofthemarket, from37%inApril2022to44%inApril thisyear,theactualnumberoffirst-home buyertransactionshasdropped18%over thesameperiod.

VALOCITYSENIOR RESEARCHANALYST

“Largelyabsentfromthemarketare investors,whosenumberofpurchases plunged29%year-on-year.”

ShumsaidtheReserveBankofNew Zealand’sliftingoftheOCRonMay24 to5.5% -its12thcashrateincreaseina row-islikelytodampendemandinthe short-term,butnotedthatthemarket may respondmorepositivelytonewsthat interestrateshave reachedtheirpeak.

“Asizeablenumberofborrowers aresetto rollontomuchhigherrates thisyear,andwhilethatmeanspain forexistinghomeowners,theRBNZ’s forecastthatlastmonth’scashrateriseis thelastfortheforeseeablefuturewillbe encouragingfornewbuyers.”

OneRoofeditorOwen Vaughansaidthe dropinnewlistingsvolumeswashaving animpactonthemarket,withonly two regions, TaranakiandSouthland, recordinganannualincreaseinMay.

“NationwidenewlistingsinMay weredown12%onthemonthbefore anddown21%year-on-year.Thedropoff innewstockcomingtomarketwas steepestin Wellington,withnewlistings inthe regiondown41%year-on-year.In Auckland,the reluctancetolistishitting overallstocknumbers. Totallistingsfor the regionaredownnearly4%year-onyear,”hesaid.

“Fallinghousepricesandfallingsales havekeptvendorsontheside-lines throughoutautumn,andwillneeda turnaroundinbothtoenticethemback intothemarket.

“Marketconditions remainpositive forbuyers,though,withpricesnow hittingthe bottom,oratleastveryclose tothebottom,especiallyforentry-level properties.Thelackofcompetitionfrom investorsandthenewsthatrateshave peakedsuggestthisisasaboutasgoodas itisgoingtogetfor first-homebuyers.”

Pricediscounting on therise

Separate figuresfromOneRoofshow vendorsarecomingunder increasing pressuretodroptheirpriceexpectations inordertosecurea sale.

AnalysisoflistingpricesbyOneRoof foundthattheasking price hasbeen discountedinmorethanonein10 propertiesbroughttomarketinthelast sevenmonths.

Ofthemorethan62,000 residential propertieslistedonOneRoofsince October2022,15%havedroppedtheir askingpricebyatleast$10,000.

Theaveragepricedropoverthe periodwas4.82%($43,000)butsellers insome regionswereofferingsharper discounts.In WestCoastandManawatuWhanganui,theaverageaskingpricewas droppedbymorethan7%.

Auckland region’saverageasking pricedroppedby$51,144(4.59%)over theperiod,while Wellington’sand Canterbury’sfell$41,994(5.28%)and $33,294(4.28%) respectively.

NZhousepricesarefallingless rapidlyinsome regions,but figuressuggest

“A SIZEABLENUMBER OF BORROWERSARE SET TO ROLLONTO MUCHHIGHER RATES THISYEAR,AND WHILETHATMEANS PAINFOR EXISTING HOMEOWNERS,THE RBNZ’S FORECASTTHAT LASTMONTH’S CASH RATERISEISTHE LAST FORTHEFORESEEABLE FUTUREWILLBE ENCOURAGINGFOR NEWBUYERS.”

- WAYNESHUM,

The researchidentified3396discounted propertiesthatarestillavailableforsalealmost10%oftotal residentiallistingson OneRoof.co.nz.

Discountingismostprevalentin Waikato,withtheaskingpricedropped inalmost30%ofallpropertiesinthe regionthathavebeenlistedsinceOctober 2022.BayofPlentyhadthenexthighest shareofdiscounting,at29%,followedby Southland(23%)andNorthland(21%).

Just14%ofAucklandlistingswere discountedovertheperiod,whilethe percentageoftotallistingsthat were discountedinCanterburyand Wellington satat alow7%.

Taranakisellersareleastlikelyto resorttoprice-slashing,withjust2.7% ofthe region’slistingsdiscountedover theperiod.

Need forquick sales

However,the researchdoes suggestsellers arebecomingmoredesperate,withmost regionsrecordinga spikein pricedropsin recentmonths.

BetweenApril 1andMay15,onein fivelistingsnationwidewasdiscounted, upfromjust13%inthelastquarter of2022.IntheBayofPlenty,42%of listingsdroppedinprice,upfrom25%

inQ42022,andin Waikato,theshare percentageofdiscountedlistingshit 39%.Thespikesinboth regionswere fuelledbywidespreaddiscounting in Tauranga(37%ofalllistings)and Hamilton(40%).

At amajormetrolevel,thebiggestprice discountswereinQueenstown-Lakes, withsellersthereknockinganaverage $77,000off thepriceoftheirhomes.

Theaverage reductioninthe asking priceof ahomeinAucklandCity,where theaveragepropertyvalueis$1.461m, was$56,205,whilethedropinNorth Shoresuburbswas$56,039.

Somesellers,though,wereprepared totakebiggerhitsinordertoshifttheir properties.The researchidentified837 listingswheretheaskingpricewas droppedby$100,000ormore,withthe sellerof onepropertyinOhauiti,in WesternBayof Plenty,slashingtheprice by$800,000to$3.65m.

The researchalsofoundthat discountingwasmostprevalentin AucklandCentral.Almost200listingsin theapartment-heavysuburbhavebeen discountedsinceOctober2022(halfof whicharestillonthemarket),withthe averagedropintheasking priceat6.99%.

PropertyvaluedataderivedfromtheOneRoof-ValocityHouseValueIndex, takenonMay20,2023.ListingsdatatakenfromOneRoof.co.nzonMay20, 2023.Onlysuburbswith20-plussettledsalesinthelast12monthscovered.

KEYPOINTS

AVERAGEPROPERTYVALUE

BEST PERFORMINGSUBURBS YEAR

WORST

SALES

Wellington$1,070,000-27.1%

MOSTEXPENSIVESUBURBS YEAR ON

SUBURB TA

YEARCHANGE

AVERAGE PROPERTYVALUE YoY CHANGE

CoatesvilleAucklandRodney$3,714,0000.3%

HerneBayAucklandCity$3,474,000-16.1%

WhitfordAucklandManukau$3,442,000-7.7%

WaihekeIslandAucklandCity$3,215,000-16.9%

SaintMarysBayAucklandCity$2,894,000-12.8%

CHEAPESTSUBURBS

MOSTPOPULARSUBURBS

QUEENSTOWN

MotuekaitiIsland,Northland

Afterraising rates to 14-yearhigh, the Reserve Bank signals it’s done

Experts say OCRdecision will bring certainty to the market, but warnhomeowners notto expect a“bounceback” in prices anytime soon. NIKKI PRESTON reports

Therecould be “lightatthe endofthe tunnel” for thehousing market, property experts have told OneRoof, but Kiwisshouldn’t expect interest rates to plunge or house prices to soaranytime soon

OneRoof canvassed the opinions of various economists following the Reserve Bank’s clear signal to themarket that last month’s 25 basis point lift in the Official Cash Rate (OCR) to 5.5% -its highest level in 14 years -would be the last thiscycle

The Reserve Bank’s Monetary Policy Statement in May ended the bank’s most aggressive hiking cycle since 1999, but noted that interest rates would be remain higher for longer in order to return annual inflation to its target rate, predicting that cuts to the OCR wereunlikely to take place until the tail end of 2024.

However,italso noted that house prices areunlikely to fall as steeply as it had previously assumed.

Bayleys head of insights, data and consulting Chris Farhi said therehad been some concernlast year that interest rates might “rage totally out of control” and the current tweaksbythe RBNZ gavepeople more confidence around whereinterest rates wereheading.

He felt the housing market would start to stabilise in the second half of the year,but different regions could reach the bottom at different times.

“Auckland andWellington markets have corrected

faster and harder than most other places around New Zealand, so we would expect to see those two markets stabilise earlierthan others with maybe alag effect in some of the other regions.”

Ray White chief economist Nerida Conisbee said the Reserve Bank’s strong signal that the OCRhad peaked could provide people with some certainty after a stressful period of ongoing interest rate rises.

“It does provide abit morecertainty around the outlook that if you buy ahome now,whatever interest rate you areatisgoing to probablybethe peak of your repayments, and if anything, those repayments will start to reduce over time as those interest rates arecut.”

Conisbeesaid the biggest house price drops in both New ZealandandAustralia occurred last year and it was agood time to buy at thelower prices if people could get financing

“Weare not going to see arush of buyers coming in –that will absolutely start to happen when rates get cut, but you will start to see those moresophisticated investors coming back in and really takingadvantages in conditions.”

CoreLogic chief property economist KelvinDavidson did not think the “inevitable” OCR increase to 5.5% would make much of adifference to interest rates or even house prices.

“They might not rise any further –Ithink we are probably at the peak, but Ithink we will stay at thatpeak for awhile because the Reserve Bank isn’t planning on bringingdown the OCR anytime soon.”

And while the latest announcement, along with the country’s higher net migration, strong labour market, mortgage,and the loosening of theCCCFAand LVRall point towards the end of thedownturn, he added, that it also didn’t mean it was “boom time” again either “I don’t think house prices aregoing to runaway on

people so they have time to save that deposit,they can sort of start to have abit moreconfidence about the market in terms of making those decisions again.”

CoreLogic’s own research is in line with the Reserve Bank’s projections which expect sales activity to pick up in spring when house prices will also flatten

“She’s asteady as she goes market in 2024.”

Opes Partners resident economist Ed McKnight said the latest announcement shows thereis“light at theend of the tunnel” andispositive for mortgage borrowers, potential buyers and people who purchased at the peak of the market and arehoping that price increases will recover to those levels.

“They arenow forecasting that theyare going to bring it (the OCR) down earlier and faster than what they previously signalled.”

While theprojections for whenthat will start tohappen is stillmorethan 12 monthsaway,he said,having interest rates drop soonerisgood newsfor borrowers

When the interest rates finally do drop, he expects they will end up at a“morenormal level of around 4to4.5%” in the next coupleofyears rather than goingback to the super low 2% interest rates.

The Reserve Bank’s forecast that property prices will not fall as much as they previously projected is also a step in the right direction, he added, and could start to change people’s buying sentiments.

“They aresaying, ‘hey look house prices still have a little bitfurthertofall’, but nowherenear whatthey have previously said.”

He said people areholding off purchasing properties, but once they starttothink interest rates areatthe peak then they will start to buy again

“It’s not going to be atotal bounce back, but it might see the capacity for maybe 5% increases in 2024 in terms of house prices.”

HOWMUCHISMYSUBURB WORTH?

Aboutthetables

TheOneRoof-ValocityHouse ValueIndextrackstheaveragevalueofNew Zealand residentialandlifestylepropertiesat asuburb,erritorialauthority,regional and nationwide level. Theindexisdesignedtobeabletoestimatedollar values, movements,andindexation. Theindexisdesignedtobeabletouse arangeofsources of property andsalesdata, ensuringthat estimatesprovidedare able to takeintoaccountthe most recentinformation. The resultsarebased on acompositeofstatisticalmodelsandare fullystratified.The figures inthe tableshowforeachsuburbtheaverage propertyvalueattheend ofMay2023, plus thethree-monthand12-monthchange.Alsogiveforeachsuburbaretwo stats thatmeasure theimpactof thedownturn:the property value peakandthe value pre-Covid(March2020). Thesetwo figures,plusthe $changeson thecurrentaveragepropertyvalue,showthe strengthofvaluesinthesuburb.Dataforthetablesarederived fromthe OneRoof-Valocity House ValueIndex,taken on May20, 2023.Only suburbs with 20-plussettledsalesduring the12-monthstotheendof May2023 areshown.

Auckland'sRemuera, wherethe averageproperty valueis$2.662m. Photo /FionaGoodall

HAWKE'S BAY

MANAWATUWHANGANUI

WEST COAST

CanNZ expect an Aussie-like revivalinhouse pric

Economist NERIDACONISBEE on what Kiwis can learn from the housing marketacross theTasman.

During the pandemic, both New Zealand and Australia saw very fast increases in house prices.And last year,both countries saw prices fall as interest rates started to rise. Australian house prices however arenow on the rise, with New Zealand continuingtosee declines. Does this mean that NZ houseprice increases arejust around the corner? Or is there something fundamentally different to NZ property markets that will hold back aturn in market conditions.

1

THE RESERVE BANK OF NEW ZEALAND HAS BEEN

FARMORE AGGRESSIVE ON MONETARYPOLICY

Akey difference between the Reserve Bank of New Zealand and theReserve Bank ofAustralia is thelevel of aggression in trying to tame inflation. RBNZ has moved alot faster at raising rates than the RBA.As a result, price falls have been greater in NZ than what has been seeninAustralia. Now NZ interest rates appear to have peaked, this is positive for houseprices.

2

POPULATION GROWTH IS LESS STRONG IN NZ

Australia’s population growth has gone back to prepandemic levels. This has been akey driver of price and rental growth -thereare now too few homes for buyers and renters. In comparison,NZ’s population growth has been moresubdued in comparison.

Migration to NZ however is starting to pick up again and is expected to accelerate morethis year.While this will put pressureonhousing demand, it willassist

Together we can

some businesse find workers.

3NZ ECONOMY

Moreaggr

amuch greater NZ compared that NZ will ideally the Reserve quickly to reduce interest rates and avoid large rises in unemployment. It however may not be possible if inflation remains high. Thereisalot of uncertainty around this but is the main factor that has the potential to keep house price subdued longer

4CONSTRUCTION COSTS ARE HIGH IN BOTH COUNTRIES

Trying to build ahome rightnow in NZ andAustralia is really difficult.Construction costs have hit record highs, driven by both supply chain problems, building material cost increases and labour shortages. While supply chains areimproving and building material costs arecoming down, labour is still achallenge, particularly in NZ.

These construction challenges areleading to a shortage of homes being built. This has become very clear inAustralia where rents aresky rocketing and price growth is on themove. It is yettoshow up in NZ because migration hasbeen comparatively alot lower With population growth set to pick up however,NZis set to have ahome shortage in the next 12 months.

5

NEW LISTINGS IN BOTH COUNTRIESARE FALLING

In bothNZandAustralia, thereis ashortageofnew property listings. While interest rate increases have led to lower buyer activity, it hasalso meant that vendors areless likely to want to go to market. InAustralia, this has been akey to price growth starting up again. Thereissimply a shortageofproperties to buy, particularly given the rate of population growth. With NZ population increasing again, it is likely to be asimilar challengeinNZ.

6

RENTS IN NZ REMAIN STEADY,FOR NOW

Australian rents arenow increasing at their fastest rate ever recorded. This reflects ashortage of housing compared to the level of population growth.This imbalance is now showing up in houseprice increases NZ rents have remained comparatively stable, primarily because populationgrowth has only recently returned to positive.

This year,NZisexpected to see much higher levels of population growth. This will lead to moredemand for housing,higher rents and higher prices.

Based on what has happened inAustralia,and what is set to happen in NZ, house price growth in NZ is imminent. In particular population growth is back, driving up demand for housing. Soon, it is likely this will outweigh the aggressive monetarypolicy that has been implemented in NZ.Akey risk factor however is recession. Hopefully policy implemented by both the NZ Governmentand the RBNZ willavoid this occurring.

•NeridaConisbeeischiefeconomistforRayWhite

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