4 Reasons the property market is improving

There are a number of factors now in play that should affect the property market for the better:

1. This weeks drop in the OCR of 1.5 basis points to 5% will ultimately flow through to lower retail rates.
2. The low kiwi dollar is increasingly making the New Zealand property market attractive.
3. Tax cuts next April.
4. The cost of borrowing vs. cost to rent is making renting less attractive

We expect these ingredients will increase the number of sales being made through this next season.

Buyers out in force

Can you believe we are about to put up our Christmas tree on Monday the 1st. The lead up to Christmas is ramping up and with it the competition to secure sales now on. It’s increasingly evident that market values have shifted downwards. For many, the latest round of CV’s is unhelpful in understanding today’s market value. We note no shortage of buyers many of whom are already factoring in significantly lower interest rates. Many already predicting a drop next week in the OCR of 1.25%

High expectations

While conditions in the market place are continuing to be reported in bleak terms with volumes down 44.3% on the same period last year, we are continuing to make an acceptable number of sales. We note that vendors by and large continue to have aspirations of achieving a price akin to last years values, possibly fueled by the latest CV’s which in many cases are quite misleading. We can report no shortage of buyers, most of whom are already factoring lower interest rates.

New National direction

The change of government has brought with it a sense of new purpose and direction. We are now confidently expecting a lower OCR and lower income tax. An interesting side effect of the lower kiwi dollar is the enquiry developing from overseas buyers and expats looking to re-patriate. We are currently experiencing the traditional seasonal increase of marketed homes. Fingers crossed, there seems to be an increase in buyer enthusiasm to match.

Change

What a week for our world. The Obama win was the American response to a call for change. This weekend we will see if New Zealanders respond in similar fashion. Interest rates continue to be talked about in downward terms. We are noticing an increase in offers and sales – certainly, this is somewhat seasonal, but there’s no doubt interest rate falls are injecting confidence. We have had several very competitive auctions this week – the first for some time. Spring time is on our market!

Elections

The news is all elections. There are promises everywhere! With just 6-8 effective selling weeks between now and Christmas, we are seeing a significant increase in the range of homes coming onto the market. We note that the new C.V’s have come into play which for many vendors may not be helpful in understanding the current market value of their home.

The OCR drops by 100 basis points

At last, a break in the clouds. The Reserve Bank’s drop of 1% in the OCR has had an immediate impact on buyers with offers and sales being made. The market thrives on confidence – buyers are now able to look forward in the certainty of a low interest rate environment.

The recovery

Like a patient in recovery, the world financial markets are having good days and bad as they claw their way back from some of the heavy losses over the past few weeks.

In turn, the local housing markets are on an emotional/confidence roller coaster too. The result is sporadic sales and slightly confused buyers.

One thing’s for sure there are some fantastic opportunities available for those willing to take them.

A crisis of fear?

While the world’s financial problems appear to be systematic and spreading, the opportunity is how one responds.

Specifically, should I buy? To quote Roosevelt’s famous lines “The only thing we have to fear is fear itself”. Sure times are different, however, the key questions remain: Can I afford this home? And how long will I keep it?

The astute will note, a more cost affective market and likely falling interest rates. We continue to see the glass half full.

Moving forward

While the Warriors lost, the initial US bailout was quashed and many commentators were again preaching financial Armageddon. We at UP Real Estate, had a much brighter month in September than usual.

This could be due to the onset of Spring and the start of the 'traditional listing season' and/or, the desire of many of our clients to continue getting on with life.

Our observation's are, demand for property in Auckland's preferred area's is keeping values firm, or vendors who aren't seeing offers which they perceive to be reasonable are able and choosing to stay put, which is quite different from international markets, specifically the US situation.

Beyond these observations the future, as-always, is unknown. We continue to do business with great expectation.

Wall St, your street and the Warriors

Wall St stocks rose last night as investors anticipate the banking bail out – mean while the rest of the world holds its breath. Closer to home, the latest figures just released by Statistics New Zealand confirmed the obvious; New Zealand is suffering a shrinking economy.

Interestingly, against this, the latest consumer confidence survey shows a positive bounce back, with more optimists than pessimists. BNZ's Tony Alexander re-enforces this recovery belief in his latest post.

Our observation is buyers are cautiously on the prowl, understanding the merits of buying at this time and with a desire to get on with life. By and large values appear relatively intact, albeit off the highs of previous years.

Certainly for us, September is proving a much better month – with more sunshine and fingers crossed, another Warriors win on the way.

Ups and downs

After great All Black & Warriors wins, our euphoria was dampened with news out of the U.S. around the ongoing meltdown in the financial markets. This has had a sobering effect throughout the world.

The actual impact is yet to be felt – although it feels as though the market may be holding its breath as we all assess what’s happening.

In the meantime, we were interested to see this article in last weekend’s Sunday Star Times, which puts things into some balance.

Bollard slashes the OCR

Politics aside the big news this week was the significant 2nd drop in the Official Cash Rate (Read the article here)

While August sales nation wide for residential were at there lowest levels for 26 years our opinion has not changed in recent weeks. That is buyers are anticipating lower interest rates and have in increasing numbers decided to enter the market - that is to say we are witnessing a resurgence in activity and deals concluded in the areas we serve.

What's the best way to sell your house?

The Spring thaw is definitely upon us, with it warmer temperatures and it’s even raining less (hold your breath!) We’re often asked about the best way to sell – particularly as we approach the traditional selling season between now and Christmas.

The first question to answer is do we put a price on the property or not.

You would put a price on the property to sell if:
-You were sure of its value or if the attitude of the vendors was based on their desire to achieve a specific figure; and
-The vendor was under not particular time constraint to make a sale.

We would generally advise a no price approach if:
-The property (by virtue of its features and benefits) held the potential to achieve a significant premium;
-If it was difficult to value; and
-The vendor had a need to sell by a specific date.

With these thoughts in mind we would make a recommendation to the property owner based on an appraisal of the property and a full understanding of their requirements. In a changing market such as we are currently in, the no price approach can be a very productive way of finding the market value quickly.

Regardless of the process, the final sale price will be the result of a buyer and seller negotiating to the point of mutual satisfaction. Our goal is to create approaches that give the homeowner the best possible opportunity of selling.

Climate change

Last Sunday we auctioned 18 Rangitoto Ave, Remuera. The property had been the subject of an intense auction campaign with hundreds of hits on our website and over 100 people physically viewing the property. This culminated with incredibly competitive bidding on the day and a sale under the hammer of $2,220,000.

For us, this was just another verification of what we had been sensing and others had been saying. There is a change in the wind. Buyers are hunting hard. To those considering selling, now is your time. Open home numbers and inquiry levels are on the increase.

Great time to buy!

Today the Herald published an article confirming what we've been saying for a while now. Now may be your best buying opportunity! Click here to browse our latest offerings.

Good news

You can’t beat good news! The medal haul at the Olympics, alongside the All Black win managed to make us smile in spite of the weather. More good news! Wizard Home Loans report housing affordability at its best level since February 2007. If you put this alongside October 1 Tax Cuts, ongoing OCR reductions and spring time approaching, there is a recipe for an improving housing market – in sales volumes at least. Click here to read the article.

Go Mahe!

Hey it’s Olympic week and as at this Friday night we are all on tenterhooks in anticipation of some medals – let’s hope!

Speaking of competition, we have witnessed again some spirited bidding with another wonderful auction sale under the hammer and bidders lining up on several other forthcoming auctions. Similarly sales are being made off market, some for good prices.

It would be great to see a change in the weather, in spite of the ongoing downpours, we wonder if there is not a hint of change of season in the residential market.

Still waiting? Think again.

Hey some good news – the All Blacks are back on track with a great win, petrol prices are falling and we enjoyed 100% success at our Auctions this week. Many home owners we are currently talking to are of the belief it is a bad time to be selling. For us anyway, we are experiencing frustration from many buyers looking for quality homes in Auckland's preferred suburbs. Several of our open homes have fielded up to 50 groups viewing over the weekend.

It would seem we may be headed for the traditional Spring time listing season as home owners wait for gardens to improve. Buyers are already factoring in another round of lower interest rates from the Reserve Bank, they’re ready to move.

Of interest we noticed a significant increase in the number of hits on our website immediately following the Official Cash Rate decrease.

If you are considering selling, you could be well advised to consider listing sooner rather than later.

A good week inspite of the bomb

In spite of a flurry of blows to the market place that included a weather bomb, an All Blacks loss and the ongoing dissection of Hanover Finance’s demise, we have been encouraged to have fielded some strong offers and made a number of significant sales in excess of $2 million over the last week or so. The counter balance to some bad economic news was the Reserve Bank softening interest rates for the first time since 2003 last week. No doubt it will take some time for the impact of this to filter through, in the mean time, a few sunny days would be nice.

Bollard cuts the OCR - spring in sight?

Just as the last of the extreme weather front went through on Thursday morning, Reserve Bank governor Alan Bollard announced a cut in the official cash rate to 8 per cent, the first time since 2003. This piece of good news helped to counter balance the news of Hanover Finance’s difficulties announced Wednesday evening. There is no doubt that this is proving to be the winter of our discontent, but maybe, just maybe, we have weathered the worst of it. Oil prices are falling, sure this economic climate will not be a quick fix, but we have noted canny buyers rightly assessing this as potentially the best time to buy. With financial analysts pricing in five further rate cuts by March next year, the expectation is that the OCR could be around 7% at that time. Putting two and two together going forward, buyers waiting in rental accommodation in anticipation of an ongoing softening in the housing market, may now want to reassess their options.

Entertaining the kids

Yes the school holidays are upon us, and with them the challenge of keeping the children occupied. Traditionally real estate goes a little quiet over the holiday period with mothers particularly being disturbed. However it appears with the limited number of listings available currently, buyers are staying on task, pursuing a result with encouraging focus. In short it may be a better time to be on the market than some would have you think.

How 'bout a trade?

What a relief to have a spell of sunshine – everything just feels better. Or was it the All Black win? Either way, sunshine on my shoulder makes me happy!

The way we are making an increasing number of buyers and sellers happy in the current market is by using the trade mechanism. It is not always doable or appropriate, but in a number of situations we have been able to get a great result for both buyer and seller buy taking a lateral approach to their needs and in so doing, asking the question what do you want to achieve as a result of selling/buying? The answers can produce a more immediate solution.

Good news

It’s been another great week at UP!

We must be seeing things a little differently to others. We were interested to see the Herald front page headline ‘Agents leaving the industry in the face of the current housing slump’. We didn’t think as a story it rated – let alone a front page headline.

There’s no question our battle is essentially against current sentiment – yes, we know the facts, but lets all get on with our lives. Life is still beautiful! Real Estate will go on. We challenge the Herald to cover good news front pages for the next 3 months. As my mother said, if you can’t say something nice, don’t say it at all. ;)

Also we launched a video this week to give you a little taste of who we are and what we do check it out HERE

Extreme Weather

What a week of weather – extreme – the wintery blast brought with it a deepening depression with bad news from Dominion Finance and the St Laurence Group. This seems to have generated something of a pull back effect on the market with buyers once again holding their breath. There is however, a general shortage of homes available for sale. Clearly the message has got the population generally that it is not a good time to sell. This is not correct. There are many buyers standing in the market. The astute ones are enjoying lots of attention.

Glass half emtpy

While many continue to see ‘the glass half empty’ in the housing market, we were pleased to see the obvious flip side, ‘the glass half full’ report in this mornings Herald confirmed that housing affordability is improving. While is doesn’t take an Einstein to work out that if interest rates are falling and values are softening, the buyer must benefit, somehow we just seem to camp ourselves in ‘the sky is falling’ territory. Affordability is improving, buyers are buying, we are short of homes to sell, and for the first time in several weeks, we are witnessing many competitive buying situations.

Never let the facts get in the way of a good story.

While the media trumpets speculation of impending doom in the property market, we note in the fine print of todays herald some interesting facts here's the article. As they say - you never let the facts get in the way of a good story.

Fortune favours the brave

Well the week has ended with more speculative rhetoric and projected graph lines showing the ongoing demise of the property market. Oh that we mere mortals could be so accurate in prophesying the future! In the mean time, life goes on, the buying and selling of homes continues, the thing that changes the most is peoples perception of the future based on headlines. This has an effect on confidence, it's at times like these fortune favours the brave - make an offer, it's a great time to buy!

Queens Birthday weekend!

What a fabulous spell of weather. Hopefully it will last through the long weekend. Last week we wondered if things were getting better, this week we are fielding a decided increase in buyer inquiry, resulting in a steady number of offers and sales; phew! We have witnessed in fact, good competition in some cases for quality homes, open home numbers are steady – the world is not ending after all. Could be a great time to buy.

Change in sentiment?

It’s our impression that while the news of the market being at its lowest ebb in years may be correct, there appears to be a slight change in sentiment. With several banks dropping interest rates, indications seem to be rates easing or at worst staying the same. Buyers are increasingly taking this on board while assessing a market place where values are looking as though they may have stabilized. Putting two and two together is having many say this could be as good as it gets and making an offer. Certainly for us activity and sales are up.

Call me an optimist

Do you sense a change? Call me an optimist, but there appears less negativity, buyers are about, offers are being made and sales concluded. Certainly volume is down, but we’re wondering if that’s because buyers have held hands in the hope values will fall significantly. That doesn’t appear likely. Hey, it’s Mothers Day Sunday – don’t forget!

Future vision

Real Estate continues to be the favourite sport for those who believe they can see into the future. It’s amazing how different peoples visions can be.

While it’s true sales volume is down, we continue to field strong buyer inquiry for the properties we are marketing. Negotiations are taking longer to complete but with patience, we are getting there more often than not. Genuine buyers and genuine sellers will continue to reach a meeting of the minds.

The cautious approach

There is no question that buyers are taking a cautious approach. Auctions are interesting, by and large buyers have decided to stand back and not bid – once the auctioneer has declared the property as having not met reserve,one of two scenarios play out, either:

a) Buyers then bid aggressively for the first right to negotiate or
b) The property is passed in without a bid at which time multiple offers are received.

The interesting thing is that in this situation, buyers complain of not wanting to be in a ‘Dutch auction’ – go figure! Either way, the Auction process we are using is proving a very efficient way of finding the best price available to the vendor, as a consequence, we are seeing satisfying results for our vendors.

Daylight saving ends

Daylight saving ends this weekend and with it those long lazy twilights – we’ve been spoilt in what has felt like an Indian summer.
The Deutsche Bank/UBS result of billion dollar losses continues to demonstrate the fragility of the international banking sector. I suppose many will be pleased to have seen the end of the financial year. The question now is how will the 2008 year shape up? For us anyway we have enjoyed a great result in spite of some uncertainties, I guess that is the benefit of serving buyers and sellers in Auckland’s preferred suburbs.

Meaningful long term decisions

There is no doubt there is a degree of difficulty in making meaningful long term decisions in the current property market when faced with a daily barrage of negative media information, most of which is speculative.

The only available facts are historical. As they say, hindsight is a wonderful thing. Without stating the obvious, some basics must surely come in to play in making wise purchase decisions like;

1. Can I afford this?
2. Is this a home that works for me? (I love it!)
3. Do I intend to hold this for the medium/long term?

If the answer to these question is yes – history would demonstrate the purchase will add to your life personally and financially.

The ability to move forward in a purchase decision most often relates to confidence. Doing the homework is one thing – the ability to stand back from the noise of many voices and make a wise decision can be another. Sales numbers are down, and yet as the saying goes, the time to buy is when no one else is. Great in theory for some, harder in practice. We note with interest, that generally buyers would prefer to pay more in a heated market, proving one thing – the buying decision is essentially a feeling.

Recession?

Troubled financial times in the US continue with the Bears Sterns collapse. It seems as though each week there are ripple effects as a result of either: bleak stories from the subprime market, international share market woes, the demise of the local finance industry and more recently our own share market diving. So the question remains, where do you put your money? Where is the safe haven? Well, that’s the great thing about a home. Good times and bad, it’s never worth nothing. You can always rent it and it gives you somewhere to live. More particularly it provides a haven and security in troubled times. It’s interesting that whenever you want to raise money, the first thing any lender wants is some real estate as security for the loan.

We note with interest economist Tony Alexanders reaction to Cullens recession reference:

Recession? Not as we know it Captain. Forget the panic merchants and have
a Happy Easter.

Media headlines this week have focused on the near 50% probability (toss of
a coin in other words) that we may see a minor technical recession late
this year - though the data to judge whether this happens won't appear
until April 2009. But a true Kiwi recession means sharply rising
unemployment and that will not happen this cycle. That means declines in
retailing and even housing will be capped to some degree. History shows
that less panicky businesspeople and investors can make their best deals at
times when other people are headline-focused and predicting doom. So for
all those cashed up property investors waiting for better yields, purchase
time is approaching this Winter. For those companies seeking better
qualified staff hiring opportunities will soon be appearing. And for
businesses wanting better premises some will also become available soon as
under-capitalised inexperienced operators get scared into down.

In other words, this year and next year will provide a very good
environment where New Zealand's' recent appalling productivity growth
record can be reversed with resources moving from inefficient areas to
businesses struggling to get people and premises to expand. The big winners
will eventually be exporters still now in business after five years of an
over-valued exchange rate with the NZD set to decline later this year.

Our message to the nervous is don't panic. Its still fundamentally a soft
landing being talked about.

Internationally its been a week of major downs then an up with the collapse
of US investment bank Bear Sterns driving a surge in fears about other
banks. But a 0.75% rate cut in the US last night and better than expected
profit reports from two large investment banks has assuaged those concerns
somewhat - for now. But downside risks still prevail internationally and
huge volatility in exchange rates, sharemarkets, and perhaps interest rates
remains likely this year. Buckle in.

Sellers market, or buyers market?

It’s becoming very obvious that the market has become softer. There is no question homeowners have become more realistic in their expectations, resulting in some wonderful opportunities. The thing that is surprising is that buyers are not pursuing these opportunities more aggressively – if it’s not a sellers market, it must be a buyers market.

Latest REINZ stats

Statistics from REINZ confirm sales volumes in decline and a slight softening in the average value throughout Auckland. Astute buyers are aware of this and committing to purchase where home owners are meeting the current market. Through the area we serve we note a slight shrinking of marketed available homes for sale – it will be interesting to see how the supply/demand scenario plays out.

Real estate vs. the media

Some days it feels a bit like the Real Estate industry versus the media - lately it's been almost a daily occurrence. The reality we can report, is steady yet somewhat selective attendance at open homes, resulting in a steady volume of sales. Prices achieved appear to be largely in line with expectations. However, some second tier properties have been more vulnerable.

In short, the residential market is a little more cautious than usual - yet steadily producing results.

Ongoing buyer interest

We have noticed ongoing interest from buyers in the face of a barrage of negative press towards Real Estate. Auctions have been generally well bid and activity is consistent.

I guess, some are taking on board the adage that the best time to buy is when others are not.

Residential market commentary

While commentary on the residential market may indicate challenging times, we continue to be excited by the prospects of the areas we serve.

If you are selling, regardless of today’s sale price, you will be purchasing in the same market. If you are buying a home, you will purchase because the home satisfies your requirements and most of all, because you like it!

To that extent, a home is not a commodity, it is a lifestyle. If you take a long term view, it’s not a bad time to buy. In fact, the time to buy is when the heat is not as intense in the market place – like now!

School holidays end

What an amazing spell of weather we have returned to. It would seem this has brought renewed enthusiasm to the residential market with buyers out in force and a large number of home owners making the decision to sell. With this week being the end of the school holidays, we are looking forward to a busy start to 2008.