Archive | Market

Rosedale & Wairau Valley sales

JLL North Shore agent Jaye Miller has completed 2 sales in Rosedale & on Porana Rd in the Wairau Valley.

North-east

Rosedale

4 Orbit Drive, unit E5:
Features: 234m² tenanted office  
Outcome: sold for $1.015 million
Agent: Jaye Miller

Wairau Valley

7 Porana Rd, unit 1:
Features: 150m² industrial unit
Outcome: sold for $436,500
Agent: Jaye Miller

Attribution: Agent release.

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Agency records residential slowdown, but prices still rising

Barfoot & Thompson managing director Peter Thompson said this week the agency’s average selling price of Auckland homes continued to rise in 2017, but at the lowest rate in 5 years.

He said the era of rapid price increases had been reined in and the market had settled into a more stable trading environment.

“In 2017 the average selling price increased by 4.5% to $926,632 and the median selling price by 2.7% to $843,583. [Those figures are for the whole year, distinct from the monthly figures charted below.]

“What did change significantly in 2017 was the number of homes sold, which fell by more than a quarter on the numbers sold in each of the previous 3 years. The sense of urgency to buy a property regardless of its asking price has disappeared. It has been replaced by buyers taking a more considered approach.

“Normally when sale numbers fall by such a large percentage, prices retreat from their record high levels. But this has not occurred, and prices have continued to rise modestly. It underlines there is still buyer support at current prices.

“In part, this was aided by the recent release of new capital values by the council as sellers & buyers have the same information as to the potential value of a property.

“In December we sold 674 homes, a number in line with the number we sold each month for the previous 3 months.

“However, the average sales price for December at $939,871 was 2.6% higher than the average for the previous 3 months and the fourth highest on record.

“The median price in December at $870,000 was 3.6% higher than that for the previous 3 months and the second highest on record.

“Undoubtedly, the measures progressively introduced by the Reserve Bank, a more prudent approach to mortgage lending by the trading banks and a growing apprehension among buyers as to the prices being paid all played their part in cooling the market.

“At the same time, a housing shortage when the population is growing creates demand.

“New listings in December, at 571, were low, but for calendar 2017 the average number of listings each month was 1510, the third highest on record.

“At the end of the year we had 4160 listings on our books, a quarter higher than at the same time last year, while across the year average available listings on a monthly basis, at 4229, have been at their highest for 5 years.

“The growing value of Auckland’s housing stock is reflected in the changing percentages between property selling for under $500,000 and those for in excess of $1 million.”

Sales under $500,000 fell from 14.9% in 2015 to 11.1% in 2016 and to 8.9% in 2017.

$1 million-plus sales rose from 29.1% in 2015 to 35.4% in 2015 and to 37% in 2017.

Mr Thompson said sales of lifestyle & rural property in Auckland & Northland followed the same pattern in 2017 as for Auckland residential sales, falling compared to the previous 2 years but still at firm prices for good quality properties.

“Dairy farm sales in the north also had to contend with a downturn in the dairy economy, which affected activity.

“Lifestyle living retained its attraction for many and inquiries remained strong throughout the year.”

The figures:

Attribution: Agency release.

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QV says rise in average Auckland home value just $4583 for year

The average residential property value rose by 6.6% ($41,660) nationally last year, according to Quotable Value Ltd’s index.

In Auckland, the rise was just $4583 (0.4%) for the year.

In a few places the movement over the year was downward, including a 0.1% fall in Christchurch.

QV recaps

QV national spokesperson Andrea Rush said the general trend was for slowing in the rate of growth due to loan:value ratio (LVR) speed limits, stricter retail bank lending criteria & uncertainty ahead of the election, but in some areas values rose rapidly while decreasing in others.

Ms Rush said sales volumes fell every month from the 2016 figures. From February-October the drop in sales exceeded 20%/month, before picking up in November, when a post-election late spring surge saw them jump to just 10% lower than November 2016 levels.

“A slowdown in the rate of value growth in the housing market that began in the latter part of 2016 with the introduction of LVR speed limits, requiring a 40% deposit by investors, continued throughout 2017.

“The frenzy in the market of the previous 3 years, induced by high numbers of investors in the market, subsided and we saw a return to more normal levels of activity in housing markets around the country.

“By October, nationwide annual value growth had slowed to 3.9%, the lowest rate of growth seen in 5 years, and for the Auckland region it slowed to -0.6%, the slowest annual rate of growth seen there since Mach 2011.

“High prices, constraints on finance caused by tightening in retail banks lending criteria and higher deposit requirements removed many buyers from the market and sales volumes plummeted.

“Potential housing policy changes in the lead-up to the election also caused uncertainty and people took a wait-&-see approach, causing activity to slow dramatically over the winter quarter, and this resulted in value decreases in many areas.

“The usual annual spring surge was very slow to arrive and listing levels and market activity did not pick up until November and December and this can be seen in both sales volumes and value growth recovering in the last two months of the year.

“The annual rate of value growth recovered to 6.4% in November & 6.6% in December, and sales volumes for November lifted 21.0% higher than in October. This was partly due to buyers delaying purchasing until the election result was decided, and may also have been in part due to some buyers racing to purchase before the new foreign buyers’ ban in December.

“The slight easing in LVR restrictions by the Reserve Bank due this month is likely to help improve activity & demand in the market as we move through the summer months.

“Low interest rates, relatively high net migration & lack of supply means market drivers remain, and we are likely to see values hold for the most part during 2018 in the main centres, but the trend of lower rates of growth is likely to continue.

“However, areas where investors were previously very active may continue to see values drop back where prices remain too high for first-homebuyers, particularly in Auckland, Hamilton & surrounding districts.

“Some regional areas may continue to see stronger value growth than the main centres during the year.”

Below, the dollar figure is the average value for December. The first percentage is for the 3 months to December, the second is for the last 12 months (QV switches those around in its tables) and the third is the change since the 2007 peak. For Auckland, QV still works on the old council boundaries:

Auckland region, $1,051,762, 1.2%, 0.4%, 92.5%
Rodney, $941,029, 0.1%, 1.3%, 60.4%
North, $961,471, 1.6%, 0.4%, 60.1%
Hibiscus Coast, $921,890, -1.7%, 2.0%, 57.0%
North Shore, $1,226,509, 2.6%, 0.7%, 90.1%
Coastal, $1,405,509, 3.1%, 0.7%, 86.5%
Onewa, $981,844, 2.1%, 0.6%, 97.9%
North Harbour, $1,192,164, 2.1%, 0.6%, 96.2%
Waitakere, $824,271, 1.0%, -1.9%, 94.4%
Auckland City, $1,245,536, 1.6%, 2.2%, 100.1%
Central, $1,085,314, 0.6%, 2.2%, 90.6%
East, $1,575,133, 2.8%, 3.6%, 97.7%
South, $1,100,710, 0.1%, -0.4%, 104.5%
Islands (low volume), $1,161,110, 6.6%, 13.7%, 81.6%
Manukau, $895,606, -0.3%, -1.0%, 95.7%
East, $1,150,996, -0.7%, -0.9%, 93.1%
Central, $695,724, 1.1%, 1.1%, 85.1%
North-west, $769,615, -0.3%, -1.5%, 108.3%
Papakura, $696,713, 2.6%, 2.2%, 93.7%
Franklin, $666,676, 0.5%, 1.0%, 68.5%

Northern border, down country & national:

Far North, $421,582, 3.0%, 11.8%, 5.9%
Kaipara (low volume), $496,551, -3.7%, 6.2%, 25.2%
Hamilton, $543,446, -0.5%, 1.6%, 50.3%
Tauranga, $693,725, 1.0%, 3.2%, 44.1%
Gisborne, $293,346, -0.6%, 8.9%, -1.3%
Wellington region, $628,450, 3.6%, 9.4%, 37.9%
Christchurch, $493,706, 0.4%, -0.1%, 30.1%
Dunedin, $391,098, 2.7%, 10.4%, 36.6%
Queenstown-Lakes, $1,111,995, 3.0%, 8.8%, 61.7%
Total NZ, $669,565, 3.6%, 6.6%, 61.6%

Link to full index: QV house price index for December 2017

Attribution: QV tables & release.

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Lighter Quay unit passed in

A Lighter Quay leasehold apartment attracted bids at Ray White City Apartments’ final auction for the year today, but offers fell $25,000 short of the asking price.

Unusually, the city apartment specialist also had 2 houses listed today, in Mt Roskill & Te Atatu. Both attracted a bid but were passed in.

CBD

Wynyard Quarter

Lighter Quay Stratis, 83 Halsey St, unit 515:
Features: leasehold, 49m², fully furnished one bedroom
Outgoings: rates $1825/year including gst; body corp levy $6429/year including $3901 ground rent, residents’ society levy $201/month
Outcome: passed in after bid at $195,000, vendor asking price of $220,000 disclosed
Agents: Liz McCarthy

Attribution: Auction.

 

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Updated: Parking space for a millionaire, Vinegar Lane apartment sold

Published 14 December 2017, updated 21 December 2017:
Update: A Vinegar Lane apartment has been sold post-auction (see below under Isthmus west).

A basement carpark space in the Quay Regency building on Auckland’s downtown waterfront sold at Ray White Apartments auction for $265,000 today – $9815 for every square metre of its 27m² share of the basement.

The woman selling the space, Shelley Jones, said after the auction she’d joked about getting $200,000 for it and couldn’t believe the sale price.

Bidding had started at $70,000 and rose quickly in $10,000 & sometimes $20,000 steps, with several bidders in the room & on the phone.

I’ve been using figures of $70-80,000 for parking spaces around the central city – and higher where there’s a distinct inability to park nearby. A parking space in the Metropolis building recently sold for $140,000.

After that, anything under a million dollars for the next offering, a spacious brand-new apartment in the Aria Ponsonby development on Vinegar Lane, was going to feel flat, and bidding fell well short of that. The apartment has 68m² of internal space, and balconies in new developments like this one aren’t a Juliet where you can’t sit down. Parking is also at a premium.

CBD

Victoria Quarter

Zest, 72 Nelson St, unit 214:
Features: 23m², furnished one bedroom
Outgoings: rates $1045/year including gst; body corp levy $1788/year
Income assessment: $320/week, fixed until 12 January
Outcome: no bid
Agents: Michelle & Judi Yurak

Waterfront

The basement parking space (above) and the space, with vehicle.

Quay Regency, 148 Quay St, carpark 5:
Features: 1/20 share in 540m² basement parking area (so, 27m², but the actual parking space is about 12m²)
Outgoings: rates $759/year including gst; body corp levy $601/year
Income assessment: $275/month on fixed rental just ended, appraisal $80-100/week
Outcome: sold for $265,000 at $9815/m² share of whole basement
Agents: Daniel Horrobin & Damian Piggin

Isthmus west

Grey Lynn

Updated: Aria Ponsonby, 11 Vinegar Lane, unit 203:
Features: 68m² internal + 8m² balcony, 2 bedrooms, 2 bathrooms, 2 parking spaces
Outgoings: rates $1972/year including gst; body corp levy $4916/year
Income assessment: $800-850/week furnished
Outcome: passed in at $800,000, sold post-auction for $860,000
Agents: Michelle & Judi Yurak

Attribution: Auction.

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Suburban cross-leases & apartment sell, central apartment buyers already on holiday

3 suburban cross-leases & an eastern bays apartment were sold at Barfoot & Thompson auctions this week.

One central city apartment attracted a bid, 2 others didn’t, and the auction of a fourth was postponed until January.

CBD

Learning Quarter

Forte Residences, 37 Symonds St, unit 1401:
Features: 2-bedroom sub-penthouse, 2 bathrooms, balcony
Outgoings: body corp levy $3694/year
Income assessment: $510/week, fixed until 11 April
Outcome: passed in at $450,000
Agents: Oscar Zhao

Uptown

Avoka, 31 Day St, unit 8B:
Features: one-bedroom apartment, balcony; remedial works pending, offered with no claim against vendor
Outgoings: body corp levy $6765/year
Outcome: no bid
Agents: Jack Atherton & Sherryl Jones

Victoria Quarter

Hobson Gardens, 205 Hobson St, unit 7E:
Features: 102m², 2-bedroom apartment, 2 bathrooms, parking space, storage
Outgoings: body corp levy $4726/year excluding water
Outcome: no bid
Agents: Stephen Shin & Yasu Ka

Sugartree, 27 Union St, unit 115:
Features: 68m² internal, 2-bedroom apartment, 2 bathrooms, 8m² balcony
Outcome: auction postponed until Wednesday 17 January
Agent: Peter Wu

Isthmus east

Kohimarama

4 Averill Avenue, unit 3:
Features: one-bedroom apartment
Outcome: sold for $590,000
Agent: Lynn Gruenwald

Royal Oak

1 Ambury Avenue:
Features: cross-lease, half share in 827m², 4-bedroom bungalow, 2 bathrooms, carport
Outcome: sold for $1.325 million
Agents: Helen Gu

Isthmus west

Kingsland

69 Third Avenue:
Features: cross-lease, 3/5 share in 1131m², 3 bedrooms, 2 bathrooms, double garage
Outcome: sold for $1.19 million
Agent: Jo Pickering

North-east

Devonport

30 Kawerau Avenue:
Features: cross-lease, half share in 612m², 3-bedroom house, study, offstreet parking
Outcome: sold for $1.36 million
Agents: Sue Harrison & Toni Gregory

Attribution: Auctions.

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2 sales out of 7 at apartments auction

2 apartments were sold today at City Sales’ final auction for the year, out of 7 on offer.

The first sale was a one-bedroom unit in the Renaissance (pictured), Manukau Central, and the other was a leasehold unit at Lighter Quay.

CBD

Learning Quarter

Tetra House, 85 Wakefield St, unit 913:
Features: 39m², one bedroom, 2 bathrooms; approved for short-term student accommodation only
Outgoings: rates $1201/year including gst; body corp levy $4794/year
Outcome: passed in at $300,000
Agent: Iona Rodrigues

Uptown

Volt, 430 Queen St, unit G01:
Features: 48m², 2 bedrooms, courtyard
Outgoings: rates $1175/year including gst; body corp levy $4703/year
Outcome: passed in at $375,000
Agent: Dave Cousins

132 Vincent St, unit GD:
Features: 73m², 2 bedrooms, parking space
Outgoings: rates $2610/year including gst for unit & parking; body corp levy $6646/year for unit & parking
Outcome: passed in at $650,000
Agent: Susan Frear

Victoria Quarter

Fiore, 152 Hobson St, unit 302:
Features: 35m² studio, deck
Outgoings: rates $1071/year including gst; body corp levy $2544/year
Income assessment: $370/week, fixed until October 2018
Outcome: passed in after a bid at $150,000 & vendor bid at $200,000
Agent: Dave Cousins

Wynyard Quarter

Lighter Quay, 77 Halsey St, unit 409:
Features: leasehold, 60m², fully furnished 2 bedrooms, 4m² deck, parking space
Outgoings: rates $1903/year including gst; body corp levy $9374/year including $4547/year ground rent, plus $2571/year residents’ society fees
Outcome: sold for $320,000
Agents: Val Luo & Maggie Sun

North-west

New Lynn

Karekare Apartments, 17 Crown Lynn Place, unit 5K:
Features: 40m², one bedroom, deck, parking space
Outgoings: rates $1061/year including gst; body corp levy $3888/year
Outcome: no bid
Agent: Trisha Shanaghan

South

Manukau Central

Renaissance, 18 Ronwood Avenue, unit 11H:
Features: 32m², one bedroom, 6m² deck, parking space
Outgoings: rates $1131/year including gst; body corp levy $2856/year
Outcome: sold for $315,000
Agent: Andy Faulkner

Attribution: Auction.

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NZ residential investment rules to tighten, while portfolios around the world are traded

In contrast to the new New Zealand government’s quick move to lock foreign investors out of buying existing homes, residential (apartment) portfolios are becoming a tradeable commodity in much of Europe.

Large institutions have long owned much of the intensive housing – condominiums – in the US.

There are differences. Most of the European portfolios being traded are apartment blocks, and New Zealand has developed an investment style of individual purchase of units in them.

Another difference is that Chinese investors, in particular, have looked for suburban houses to buy in countries such as New Zealand, Australia & Canada, and have left them empty. The regulatory approach might have been different – even non-existent – if those homes had been tenanted.

The NZ Government introduced its bill controlling foreign investment to Parliament last Thursday and it’s first on the order paper tomorrow, to get its first reading.

The bill will amend the Overseas Investment Act 2005 “to ensure that investments made by overseas persons in New Zealand will have genuine benefits for the country”. More specifically, the bill will ensure that overseas persons who are not resident in New Zealand will generally not be able to buy existing houses or other pieces of residential land.

Residential portfolio transactions occur frequently in Europe, where long-term rental is common. Among the latest investments, Paris-headquartered AXA Investment Managers bought into Finnish housing in June, added to its portfolio in November and took the total value to €170 million with a €130 million purchase last week.

AXA’s latest acquisition contains 909 modern rental apartments, a mix of freehold & leasehold, in 22 buildings, mostly in or near the capital, Helsinki, and second largest city, Tampere. Constructed since 2010, the lettable area totals 44,198m², and individual units average 49m². AXA said the portfolio was almost fully occupied.

AXA’s latest purchase was for 2 funds, but it didn’t say where they were from. The June purchases were for 2 German funds, and AXA noted then they were in line with its investment strategy “of acquiring modern multi-family residential properties in attractive European markets. Finland presents a particularly compelling investment proposition with regards to this asset class, benefiting from steady rental growth over the past decade, coupled with a backdrop of undersupply”.

In a different segment of the residential market, Cushman & Wakefield’s annual report on UK student accommodation says 602,000 purpose-built bed spaces are available to students for the 2017-18 academic year, and the private sector has delivered 87% of the new stock of 30,000 new bed spaces. The average headline weekly rental growth between 2016 & 2017 was 2.9%.

Packaging real estate investment makes sense, as US giant the Blackstone Group shows with its holding of 147,000 multi-family units in the US & elsewhere. But it also differs from the old European policy of long-term ownership, with a philosophy of “buy it, fix it, sell it” – “We acquire high quality, income-producing assets at discounts to replacement cost, we unlock value by proactively addressing any physical or operating issues through aggressive asset management; once assets are stabilised we sell the investments to long-term real estate holders and return capital to our investors”.

Securitisation has worked alongside owner-occupier & individual investor holdings of commercial & industrial real estate in New Zealand, but many investors burnt by the sharemarket collapse in 1987 turned to hard assets as an alternative, and that ill feeling towards securities still exists.

One thing the new investment regulations won’t do is to deprive the apartment market of the seed investors needed to launch new products. Foreign investors will still be able to buy into those – and without those investors, most of New Zealand’s central city apartment market wouldn’t exist.

The new government’s tightening of investment rules is one of a few prongs to attack the escalation in home prices. Others are the freeing of land from anti-growth urban boundaries, the provision of funding to supply the infrastructure for more housing (the absence of which was a primary cause of the urban boundaries being created), and a government focus on providing lower-cost housing.

All those measures are being introduced almost simultaneously, but their effects will occur at different speeds. Together, though, they should quickly change the face of markets in 2018.

To see what others are doing, the Taylor & Francis research link below takes you to a number of articles on ideas around the world, and how global investment crosses local residential intentions.

Links: Overseas Investment Amendment Bill
AXA, 15 December 2017: Acquisition of 909-unit residential portfolio in Finland for c.€130 million
Cushman & Wakefield, UK student accommodation annual report
Taylor & Francis, International Journal of Housing Policy
Taylor & Francis, special issue January 2017: The globalisation of local real estate: The politics & practice of foreign real estate investment

Attribution: AXA, Government, legislation, Cushman & Wakefield, Taylor & Francis.

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Twyford launches the KiwiBuild plan

Housing & Urban Development Minister Phil Twyford.

Despite widespread construction sector doubt that delivering 10,000 more homes/year is beyond New Zealand’s capacity, Housing & Urban Development Minister Phil Twyford continued to talk yesterday as if the Government’s KiwiBuild initiative would deliver precisely that: 100,000 affordable houses over the next 10 years.

Treasury forecasts showed that KiwiBuild would boost residential construction investment by 10% by 2022.

The country, and particularly Auckland, has been running well short of housing demand, and well short of the previous government’s aspirations to get more homes built.

Consents have been stuck on an annual rate of 30,000 new homes for months. I wrote in July that, at an average 2.7 residents/household, New Zealand’s population increases of the preceding 2 years would have required housing increases of 36,000 homes built in the year to June 2016, and 39,300 built in the year to June 2017 (ignoring demolition or falling into disuse).

Mr Twyford said yesterday: “The latest forecast in the half-year economic & fiscal update shows an extra $5.4 billion of residential construction investment will take place over the next 4 financial years, largely as a consequence of KiwiBuild.

“Ministry of Business, Innovation & Employment projections under the previous National government had shown the number of houses consented would stall and start to fall in coming years. This government is focused on turning that around.

“Through KiwiBuild & policies to drive speculation out of the market, including the ban on non-resident foreign buyers, the Government is delivering a more stable housing market.

“Wages are forecast to grow faster than house prices for the first time since the global financial crisis, and interest rates are expected to remain low. Home ownership will become more affordable for New Zealand families.

“The Government will make these forecasts a reality by:

  • delivering 100,000 affordable homes through KiwiBuild
  • building more state houses, rather than selling off the ones we have
  • ensuring there is enough skilled labour, through our immigration settings & training initiatives
  • freeing up land supply
  • enabling infrastructure financing, and
  • enabling higher productivity in the building industry.

“The Government’s housing package will deliver more affordable homes, more state houses, improve the quality of rentals & security of tenure, and tilt the balance in favour of homebuyers, rather than speculators.”

Attribution: Ministerial release.

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2 Westgate sales & 5 leases on Shore & K Rd

Bayleys North Shore agents completed 2 industrial unit sales at Westgate in November, and signed 5 leases on Karangahape Rd (pictured), Takapuna, and 3 in Rosedale.

Sales

North-west

Westgate

Northside Drive, lot 1, unit 1:
Features: 325m² industrial unit, 4 parking spaces
Outcome: sold in November for $895,000 + gst, at $2754/m² land & building
Agents: Matt Mimmack & Ashton Geissler

Northside Drive, lot 1, unit 2:
Features: 650m² industrial unit, 8 parking spaces
Outcome: sold in November for $1.92 million + gst, at $2954/m² land & building
Agents: Ashton Geissler & Matt Mimmack

Leases

CBD

K Rd

258-264 Karangahape Rd, level 1:
Features: 370m² retail area
Rent: leased in November for $48,000/year net + gst, premises rental $130/m²
Agents: Terry Kim

North-east

Rosedale

33 Apollo Drive, unit 3:
Features: 174m² office, 5 parking spaces
Rent: leased in November for $45,200/year net + gst, parking $20/space/week, net rent excluding parking $40,000/year, premises rental $230/m²       
Agents: Laurie Burt & Alex Strever

68 Paul Matthews Rd, unit D:
Features: 190m² industrial unit, 3 parking spaces
Rent: leased in December for $35,000/year net + gst, parking $5/space/week, net excluding parking $34,220/year, premises rental $150/m²  
Agents: Alex Strever

8 Piermark Drive, unit E:
Features: 224m² industrial unit
Rent: leased in November for $36,000/year net + gst, premises rental $161/m²
Agents: Laurie Burt & James Kidd

Takapuna

66 Anzac St, ground floor:
Features: 76m² retail, 2 parking spaces
Rent: leased in November for $27,780/year net + gst, parking $55/space/week, net excluding parking $22,060/year, premises rental $290/m²
Agent: Ildy Meixner

Attribution: Agency release.

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