Quarter Four 2018 - Western Springs

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TheQuarterlyIn this issue The Year Ahead What has 2019 got in store for the property market?Farmers’ Markets 12 of the best weekend markets in and around…
TheQuarterlyIn this issue The Year Ahead What has 2019 got in store for the property market?Farmers’ Markets 12 of the best weekend markets in and around AucklandThe Modern Villa How to modernise and maximise thees grand old damesMondays Wholefoods, KingslandRay White Damerell Group Ltd (Licensed REAA 2008) 259 Ponsonby Road • 422 Richmond Road • 923 New North Road PO Box 47028 Ponsonby 1144 Office Hours: 8.30am – 5pm Monday – Friday (09) 376 2186Western SpringsIssue 29 Q4 2018Licensed (REAA 2008)Licensed (REAA 2008)Positiveness, professionalism and ease to deal with.Straight talking, follow through & deliver great results!March 2018January 2018This document is printed on an environmentally responsible paper, produced using Elemental Chlorine Free (ECF), FSCÂŽ Certified Mixed Source pulp sourced from Responsibly Managed & Legally Harvested Forests, and manufactured under the strict ISO14001 Environmental Management System. PAGE 2 | QUARTER ONE 2016A Note From Gower & Simon With every New Year come the inevitable predictions. Will we see house prices crash, as they have across the Tasman in Sydney and Melbourne; hold steady, as they (mainly) did last year; or will all the naysayers be proved wrong as sales rise by double digits over the next 12 months? More than any year in the past 10, housing movements in 2019 will be hard to accurately foretell. It comes as no surprise, then, that this is the question everyone wants answered. If only it were that simple. With this in mind, we asked our resident economic and finance journalist, Vicki Holder, to look through her little black book and ask the experts where they think the housing market will be heading in 2019. Her ensuing article on p4 of this edition of The Quarterly makes for a reassuring, if not startling, read. Further into the magazine the predictions for 2019 continue as our regular trio of in-house experts in property investment, body corporate affairs and the mortgage market each cautiously forecast and broadcast their thoughts for the coming year. Needless to say, no one is stickingtheir neck out, but neither are they ringing the Doomsday Bell. One thing that’s certain is beer tastes better in the summer. And to celebrate this indomitable fact, we interviewed craft beer guru Rich Yong, a hoppy entrepreneur who’s just set up shop in Vinegar Lane offering Beer 101 education classes, washed down with a delicious selection of local and international brews. If you like your beer, this is definitely worth a read. Summer is also all about discovering new things to do and new places to visit in this wonderful city we call home. What better way to kill two birds with one stone than to plan a trip to one of the dozen or more farmers’ markets that are dotted in and around Auckland – from Clevedon to Puhoi and everywhere in between.architect and villa expert Darren Jessop, who has transformed more than his fair share of old-fashioned villas into lightfilled, modern family homes. We do hope you enjoy reading this issue of The Quarterly and, as always, we would love to hear what you think about the services we provide, or any suggestions on the type of information you would like to receive. We look forward to hearing from you. Gower Buchanan & Simon Damerell Directors M: 0274 484 943 gower.buchanan@raywhite.com M: 021 661 304 simon.damerell@raywhite.comIf there is one style of home that’s become synonymous with Ponsonby and Grey Lynn, it’s the beloved villa. Homeowners love them… even more so when they have been expertly renovated and expanded to adapt to the way we live our lives today. We speak with local THE QUARTERLY | PAGE 1An outdoor room is a mandatory feature with villa renovations by architect Darren Jessop. Here, he has used large glass skylights to bring in the light. Read more on p.30.PAGE 2 | QUARTER FOUR 2018Contents PAGE 4PAGE 18The forecast for summer might be bright, but the same cannot be said of the year ahead for the Auckland property market. Not that it’s shady, just constrained is how our property experts view it. Which is not a bad thing.The team at Scope Strata Management is looking forward to what 2019 brings. Whilst there has been much said recently (often conflicting) about the property sector, you only have to look at the number of cranes on the Auckland skyline, including the ones recently added, for the true answer.Benign CertaintyPAGE 9Local Market Wrap As we reflect back on the events that shaped 2018 and look forward what 2019 will bring, what do we see?PAGE 10In Your Neighbourhood Some useful statistics that will give you an insight into what’s trending in the local real estate market.Body CorporatePAGE 19The Mortgage Market What’s the forecast for 2019? What do the banks have in store for us and is the outlook looking fine for the economy? Let’s take a look.PAGE 20Recent Sales A snapshot of the homes sold in the fourth quarter of 2018.PAGE 26Top Of The Hops PAGE 14See, at a glance, the vital real estate statistics in nearby suburbs.Musician-turned-hophead Rich Yong talks about his passion for craft beer and his goal to spread the word about the amber nectar from his newly opened shop in Vinegar Lane.PAGE 16PAGE 30Suburb OverviewFrom The Auction Floor After a very lacklustre start to the spring selling season the final quarter of 2018 arrived with a loud bang.PAGE 18Property Investment In the past 12 months rents in Greater Auckland have increased by an average of just under 3.5%. As mentioned in previous reports, one-bedroom properties continue to show the most growth throughout Auckland, and based on sale prices, are providing the greatest yields.PAGE 9Farmers Market Update Special day trip or regular weekend haunt, here’s our comprehensive guide to all the regular farmers’ markets in and around Auckland.PAGE 12PAGE 4PAGE 20The Modern Villa With their crisp, traditional façades and cutting-edge, contemporary additions, previously outdated villas are enjoying a modern renaissance, thanks to forwardthinking architects like Darren Jessop.PAGE 26PAGE 34Show Me The Money! As of the beginning of January, new anti-money laundering legislation that specifically targets the real estate industry, came into effect. How do these new rules affect the way we buy and sell property?PAGE 30THE QUARTERLY | PAGE 3Benign Certainty The forecast for summer might be bright, but the same cannot be said of the year ahead for the Auckland property market. Not that it’s shady, just constrained is how our property experts view it. Which is not a bad thing. BY VICKI HOLDEREverything is pointing to a period of stability. Gone are the rollercoaster highs and the lows of years gone by. The fundamentals of the economy are strong, though it’s predicted to slow. Unemployment is low at 3.9 per cent, so there is no fear of a recession. Yet there are a few bumps in the road ahead, which could spell uncertainty, especially for property investors, as legislative changes take hold. Kiwibank’s chief economist, Jarrod Kerr, says there is actually a lot going on right now in the property market, not just here in New Zealand, but in other parts of the world. “We saw a ramp up in prices in 2014 to 2017, then a cooling off,” he says. “There are few people who would disagree that prices were running hot. Foreign buyers PAGE 4 | QUARTER FOUR 2018had a strong influence and we’ve seen a pullback in that part of the market. That’s also been felt in Sydney, Melbourne, Brisbane, Singapore and Vancouver.” “Also, the massive capital outflows from China seen between 2014 and 2016 have stopped and started to reverse. China took steps to control its currency in 2017, and it is now much harder to take money out of the country. It is no coincidence that Auckland and other markets have slowed in response to either taxes on foreign buying and/or the latest strangling of funds out of China.” Late last year the Government also clamped down on foreign buying. Kerr says there was some last ditch buying ahead of these changes, but now the market has cooled.Steady as she goes Core Logic’s Nick Goodall doesn’t expect the Auckland market to drop significantly due to the effect of the foreign buying ban. “Auckland has already seen a significant reduction in sales volumes. But we’ve seen a lift [in price] in Auckland year on year. That will reach a level of stability for sales and it will be much the same next year.” He points out that the Auckland market is unique. “Although listings are low in surrounding areas, there are still quite a large number of properties on the market in Auckland. And this number has been steadily increasing over the last two years, which has contributed to the reduction in the base price growth. People feel there’s always more out there,” he adds.But the biggest impact on the property market at the moment is local policy, primarily aimed at reigning in investors. This is already starting to take effect with a much flatter market. Policies initiated last year recognised our dropping home ownership rates and the increase in numbers of Kiwis living in rental properties. These policies include:`` Increasing the ‘bright line’ test from two to five years`` Banning foreign purchases `` Removing the negative gearing loophole`` Healthy Homes Guarantee Act –ensuring all rental properties meet a minimum level of heating/insulation.These, and the uncertainty around their long-term effects, will continue to have an impact in the investment market during 2019. One effect is that house prices may be held back over the next few years, warns Jarrod Kerr. “We believe a combination or all of the above changes coming through will impact growth, but not the overall direction of our property market. Remember you only pay these taxes when you have made money,” he adds. “But we don’t expect amajor correction in housing because the fundamentals are solid and there are no signs of any sinkholes.” In February, the Tax Working Group will produce their final report with recommendations on changes to the way capital assets are treated, with particular regard to the housing market. From April 1, residential landlords will no longer be able to offset their losses against other income. Nick Goodall says the potential impact of taxing gains on property is still not confirmed. “We need more information. Large investors have already restructured and might not be impacted when the change comes in. But not being able to write off their [personal] tax might impact the smaller investor.” That said, he does not expect a mass exodus of investors from the property market. And Kerr agrees: “Investors are comfortable knowing there are not enough homes. Prices probably won’t go down in a meaningful way. But I don’t think they’ll go up for a few years either. It will consolidate because we’ve had strong gains in the past few years.”Then there are changes coming to the Residential Tenancies Act, including ending the ‘no-cause’ tenancy terminations, increasing the notice a landlord must give tenants to terminate a tenancy to 90 days, and limiting rent increases to once a year. Still not enough houses Property commentator Ashley Church predicts that with the continued shortage of housing in Auckland, the rental market will reach crisis proportions in 2019. “Rentals will of course be available, but there will be no growth in numbers. That will impact the property market.” Yes, investors face uncertainty, but for Auckland the fundamental pillar holding the market steady is the fact Auckland still does not have enough homes. Although population growth has started to slow and net migration has eased, we still have a cumulative housing shortage to address. Auckland has a target of 13,000 new builds a year and we’re only managing to build 50 per cent of that figure. Challenges to achieving that rate of construction come in the form of THE QUARTERLY | PAGE 5PAGE 6 | QUARTER FOUR 2018available construction labour, Resource Management Act consent processing, and large building companies going under. However, the Unitary Plan is already having a positive effect on Auckland’s ability to add supply, plus the mighty KiwiBuild programme has now hit the market, meaning more homes are due to be built in 2019 than in 2018. Another, less publicised statistic, yet certainly a contributing factor has been a lift in the number of people per house, says Kerr. “We’re living in our parents homes for longer. We’re getting more people together to buy a house. This is a clear signal of an under-supplied market.” Plus, more people are relinquishing the traditional Kiwi Dream of a quarter acre block to live in higher density apartments. Evidence of this is a change in the type of building consents granted over the past year. Previously, up to 80 per cent of consents were for standalone homes, but that’s reduced to 50 per cent. With apartments and townhouses on the increase, Auckland’s intensification will only magnify in proportion. Many Aucklanders have opted out or are getting out altogether, lured by the appeal of lower prices in regional areas like Northland, the Waikato and Hawke’s Bay. Getting a deposit together for a home in Auckland has been difficult, but not so much in the provinces. In fact, Ashley Church points out that a Valocity report released six months ago that showed first-home buyers have had the biggest uplift in mortgages for a long time. Thanks to Government measures and loosening LVR’s, they are no longer struggling to get into the market. The banking factor The damning result of the Royal Commission report into malpractice in Australia flowed across the Tasman into our banking system, making less credit available to lenders in New Zealand. That has prompted the Reserve Bank to play around with loan to value ratios (LVRs)… again. Restrictions were recently relaxed and the percentage of loans allowed for clients to borrow more than 80 per cent of the purchase price of a property for owner occupied purposes increased to 20 per cent of a bank’s total lending portfolio. They also relaxed the amount consumers can borrow against investment property, lifting it to 70 per cent from 65 per cent. Expect LVRs to be tweaked again in 2019.Brian Greer from the Loan Market says that as these changes take effect, they will surely give the real estate market a confidence boost heading into 2019, making borrowing easier. “It has to be said that, on the whole, the macro prudential rules the Reserve Bank has introduced around LVR restrictions have had the desired effect on the New Zealand property market and we see ourselves in a far more stable place than prior to their implementation.” The Reserve Bank also lowered interest rates to make serviceability easier, and they remain low. Yet, the frenzy around sub 4 per cent rates was short-lived and there was a quick return to rates around 4 per cent. “They have said they’re not going to hike base rates until the second half of 2020, so that’s about as much certainty as it gets, and the only thing that could change this is a major global shock like a trade war between US and China”, says Jarrod Kerr, but that looks increasingly unlikely, he adds. However, banks remain cautious, testing affordability to meet mortgage repayments at an interest rate of around 7 per cent, despite real rates being below 4 per cent. Brian Greer explains that banks are diving deeper into clients’ living expenses. “No longer are banks just relying on their ‘in house’ formulas for living expenses. More notice is being paid to the actual costs incurred in a household as verified by their bank statements. As such, while rates may be at an all-time low, criteria for approval has not been this tight since the GFC.” Ironically, he adds… “It’s at times like these, when funding is at its most difficult, that our services become most sought after. And it is this combination of demand, driven by low rates and tight lending criteria that has contributed to our strong increase in settled dollars over the past year.” “This year, we still need to understand the impact of all the changes. But it’s clear there will be no more scrapping in auction rooms as sales hit the floor for the foreseeable future. It’s a great market for buyers because the market has effectively stalled”, says Ashley Church. “Buyers can now plan ahead because prices will continue to be the same in a benign market.”THE QUARTERLY | PAGE 7What’s Happening In The Market?PAGE 8 | QUARTER FOUR 2018Local Market Wrap As we reflect back on the events that shaped 2018 and look forward what 2019 will bring, what do we see? In short, the playing field appears to have been levelled somewhat in terms of opportunity and affordability, plus we now have an industry that is being run more professionally and transparently. There’s little doubt that measures taken during the past year are beginning to take effect. These past 12 months have seen a number of deliberate policies, coupled with some unforeseen events, come together to change the face of the property market in New Zealand – in some areas significantly, others more subtly. In summary then, back in March, the bright-line test was raised from two to five years, directly affecting those ‘quick buck’ developers from flicking on properties on after just 24 months ownership; in October, the OIO (Overseas Investment Office) clamped down on foreign ownership, which has had an immediate effect on the market place, depleting the volume of properties sold; LVRs (Loan to Value Ratios) were continually tested and tweaked during the year to advantage and disadvantage specific sectors of the market; the Reserve Bank has kept the OCR (Official Cash Rate) at an historic low, with no signal of any immediate change; and to cap it all, the Australian banks (AKA our banks) were put through the wringer across the Tasman, meaning our lending criteria and capacity was squeezed over here. Staying in Australia, the recent slide in property prices over there has made people nervous of a similar scenario playing out on this side of the ditch. So it seems that the legislative and economic levers that have been pulled by the government and the banks are doing their intended job. The housing market has reluctantly taken its foot off the accelerator and we have, more or less, returned to normal trading conditions. With mum-and-dad investors hesitating and foreign nationals shut out, it’s now prime time for first-time buyers to take their chance. And with a growing confidence in the economy, we have certainly seen a boost in this sector in the past couple on months.Average Days To Sell for Ray White Damerell Group THIS QUARTER22 AUCTION20SET DATE OF SALE53SALE BY NEGOTIATIONMedian Sale Price in Greater Ponsonby LAST 12 MONTHSMedian Sale Price in Western Fringe LAST 12 MONTHSGower Buchanan Ray White Damerell Group Director 09 376 2186 gower.buchanan@raywhite.comSimon Damerell Ray White Damerell Group Director 09 376 2186 simon.damerell@raywhite.comTHE QUARTERLY | PAGE 9In Your Neighbourhood Western Springs These days Western Springs is most well-known for Auckland Zoo, Motat and the very popular Western Springs Speedway, offering options for those looking for animal encounters, education, history, adrenalin or a concert by a number of both International and local artists.Western Springs Quarterly Stats Median PriceTotal Sales$1,147,50085%167%22%last quarter167%last quartersame quarter last yearsame quarter last year$1,175,000$1,040,000$1,045,000$999,500$1,140,500$1,122,500$2,125,000$1,397,000$1,145,000$942,600$1,340,000$1,220,113$1,205,000$1,147,500Q3 2015Q4 2015Q1 2016Q2 2016Q3 2016Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018$995,000 Q3 2014$1,366,000$885,000 Q2 2014$964,000$872,500 Q1 2014Q2 2015$910,000 Q4 2013Q1 2015$640,000 Q3 2013$965,000$872,500 Q2 2013Q4 2014$760,000 Q1 2013Median Value69114710586712131088654739838Q1 2013Q2 2013Q3 2013Q4 2013Q1 2014Q2 2014Q3 2014Q4 2014Q
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