Foreigners keep high end NZ property market afloat
The real estate market in most of New Zealand is slowing with sales and prices edging downwards but the high end of the market is experiencing a boom.
Foreign buyers are keeping the higher priced sector in demand despite the national property downturn, especially in popular locations such as the waterfront areas of St Heliers, Orakei and Parnell.
Prices fell slightly in October and are now 5.5% below their market peak in late 2007, according to the latest QV Valuations report.
Nationwide there are plenty of properties for sale but many have been on the market for a long time. The number of new properties was lower than usual for this time of the year, the QV report also shows.
Across the country values were declining, although there was considerable variability within the regions, QV said. The Auckland area showed signs of stabilization during October with values 1% below March. The average sales price for the Auckland region during October was $521,526.
Values in Wellington have declined 3.4% since March, more than any other main center. However, indications showed that the market there may be starting to pick up pace, in line with better weather experienced in the capital.
‘The low level of sales activity we have seen all year continued through October, with sales well below both last year and the long term average. There is no sign of the traditional spring surge in sales and we don’t expect any significant increase in sales before the New Year,’ said research director, Jonno Ingerson.
However, good quality properties in good areas were still attracting plenty of interest, and were selling for good prices, Ingerson said.
Demand is so high that there are several buyers going after each property. A family emigrating from Britain recently paid $1.35 million for an empty 607 square meter site on Hanene Street overlooking St Heliers Bay and Chinese buyers are active in the market.
Ross Hawkins, the agent who sold the Hanene Street site said it is one of New Zealand’s most sought after streets. The site was on the market last summer as a 2,000 square meter property with a large house. When offers failed to reach $10 million, the owners split the property into three titles and kept two.
‘Buyers at the luxury end are very particular about the layout and style of their houses. They don’t want to pay for a house just to rip it down, but sometimes they will do just that,’ he explained.
Meanwhile, the Real Estate Institute of New Zealand (REINZ) shows just 3,903 properties were sold in October, the lowest October total since REINZ records started in 1992.
The volumes were only slightly above the all time record low for any month of 3,666 in January this year and are down 36% from last October. And they are slower that at the height of the recession in 2008.
The median house price was unchanged at $350,000, but the stratified House Price Index, which removes the distortions from sales of more expensive or cheaper properties from month to month, fell 0.9% in October from September.
The Auckland City market was hit the hardest with prices falling to $483,500 last month from $525,000 in September. Wellington property prices fell from $398,500 in September to $390,336 last month, while prices in Christchurch held steady at $338,000 during October.
REINZ spokesperson Peter Thompson said that the usual spring influx of listings had been late across the country this year but activity was picking up and the November figures should be better.
‘People planning to change houses appear to have held back on listing their current homes until they see what else is available and how the market is moving,’ Thompson said.