Ponsonby News asked three of the top real estate office managers to tell us what’s going on in the local market right now.
We asked Ray White, Barfoot & Thompson and Bayleys for their take.
BELINDA HANSEN
Ray White, Wynyard Quarter
Are auctions still the best way of selling?
There is no doubt that auctions are by far the best method of sale still, especially in this market where vendors are looking for cash unconditional sales in a shorter period of time in the market. Our clearance rate, year to date (sold under the hammer) for our Ray White Auckland Central and Wynyard Quarter office is 70.86% with an average of 2.7 registered bidders for each auction property and average of 30 days on the market.
Are CVs relevant these days?
CV's appear to be outdated in the market that we have travelled for the past 12-18 months. There have been so many differing changes to values across Auckland wide, buyers are looking for more statistical information about what has sold to make decisions when buying.
Debunking the myths in real estate
Myth: It is a bad time to sell and buy.
There is a lot of noise about fixed-term rates ending for some vendors and the elections. The real estate market is always relative to selling and buying in the same maarket – it is the same market whether it's a flying market or the market we have now.
The opportunity now as we head into the spring/summer market which is just around the corner, is to be on the market ready to go as the elections roll over to take advantage of a less crowded market. For those buying not selling, this is the perfect market to buy while values are affordable combined with some reasonable short term rates available.
Where are the buyers coming from – locals/overseas/investors?
The majority of buyers are local Auckland wide, with a growing interest out of the regions to either relocate or invest. We are seeing a slight increase in overseas enquiry for both residential and investment property.
ANDREW COSGRAVE
Barfoot & Thompson, Grey Lynn
Are auctions still the best way of selling?
People can think that if the property doesn't sell 'under the hammer' on auction day, that the auction process has failed. However, properties can sell prior to auction, on auction day and post auction.
We find, when you look over the same 'chunk of time' (say, 30-day period), more properties that underwent an auction campaign ended up selling than those marketed any other way.
Are CVs relevant these days?
In any market, a buyer will always look at a CV to try to work out the value of a property. In other markets, buyers used to 'add a bit' to a CV to estimate the value. In the current market, buyers are 'taking a bit off' the CV to estimate value. The problem is, not every property is selling under CV at the moment. Is the property you are looking to purchase one of these? At the end of the day, the best way to ascertain value is to compare recent sales (if available) to ascertain the value of a property in the current market.
Debunking the myths in real estate
Myth: Real estate is a great way to make money quickly (in the short term). In previous markets in Auckland, we were a bit spoiled. Some people bought property and then sold the same property shortly thereafter, making a quick profit. Though this can occasionally happen and some investors can sometimes add value to a property and make a (taxable) profit in the short term, we would say that real estate is a great way to increase personal wealth in the long term.
Where are the buyers coming from – locals/overseas/investors?
In Grey Lynn, we are finding local people wanting to live in the area (as opposed to overseas investors). People love the cool vibe of Grey Lynn, the awesome Grey Lynn Park, proximity to the city, Ponsonby, K'Road and Kingsland/Eden Park. Many of our buyers are locals that live in nearby areas and know how good Grey Lynn is and, for that reason, want to buy here.
www.barfoot.co.nz/branches/grey-lynn
BERNADETTE MORRISON
Bayleys, Ponsonby
Are auctions the best way of selling?
Auctions are an effective method of sale in all market conditions. Sellers and buyers are indeed more cautious in the current climate. However, a deeper understanding of the auction as a genuine, three stage process is valuable in realising the success of auction campaigns versus all other sale methods.
Latest Bayleys' data shows after 30 days properties that have gone to auction are 121% more likely to have sold unconditionally than those marketed using other sale methods. At 90 days on the market, a property is 43% more likely to have sold if the marketing campaign initially involved an auction. This data is incredibly similar to the 2022 calendar year and speaks to auction effectiveness despite a period of volatility.
The fear that many have is, what happens if the property doesn't sell? If not, a second wave is created by switching to a secondary method of sale, eg, price by negotiation or asking price. Our team has put properties back into a set sale date process or a second auction with a successful outcome.
The latest saw a doubling in the number of interested parties at the second auction and a 6% increase in the sale price at the second auction, compared to the highest bid at the first auction.
Additionally, if a sale isn't achieved on the auction date, is it different to having a price on a property when first listed and no unconditional offers three to four weeks later? Not from an outcome perspective.
However, from a strategy standpoint, you have yet to run the risk of pricing too high and turning buyers away or pricing too low and selling quickly when a higher price may have been achieved. Are CVs still relevant these days?
The Auckland Council website has useful information regarding how CVs are calculated and says, ‘The capital value (CV) is the value of a property for rating purposes, not the current market value of your home’. So, are they relevant? They reflect the sale prices in our neighbourhood, the medians of which are among the highest in Auckland. From this point, they can be relevant as a guide. However, it's understandable to see how they are only sometimes applicable to the home’s sale price. If a villa is in original condition, in a street with high-end sales, the CV may be much higher than what the property sells for. The CV may be much lower than its market value for a recently renovated home that has yet to have its improvements considered.
For these reasons, we recommend engaging with the listing licensee, building a degree of rapport and getting the latest market feedback on the home you're interested in. Where are the buyers coming from? Once established in the neighbourhood, we often find people wanting to stay here, moving within the area by upsizing, downsizing or purchasing a renovated home rather than renovating themselves.
To give this question relevance to our neighbourhood, I've analysed the last 40 sales conducted in Bayleys Ponsonby office. The buyer composition was as follows: · 79% local · 13% wider Auckland · 5% international · 3% national With 20% of these buyers coming outside the local community, it's important to consider the effectiveness and reach of a sales marketing campaign.
We're seeing a reasonable amount of overseas interest from expatriate Kiwis and prospective buyers based offshore. While this enquiry is yet to translate into sales volumes, we anticipate a ripple effect from surging net migration, which is on track to reach 90,000 by year end. Many of these new entrants are competing against Kiwis for a limited supply of private rentals, so there may be pressure on the physical demand for housing, particularly across the city harbour suburbs, which feature some of the city’s most desirable amenities.
www.bayleys.co.nz/offices/ponsonby-167
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Published: August 2023