Action on the Home Front

By | April 15, 2009

12 April 2009

Source: NZ Herald

Home buyers – including expats with an eye for a bargain – have returned to the market in strength, hunting both high end and investment property.

International traffic to Trade Me Property surged 21 per cent last month. Brendon Skipper, head of Trade Me Property, says expats are “looking for a job, looking for a car and looking for a property” on the site.

Megan Jaffe, owner of the Ray White franchise in Auckland’s swanky Remuera, says with expats buying, sales have picked up on top-end houses.

Ray White’s March sales figures rebounded strongly, soaring 44.1 per cent. Chief executive Carey Smith says the hottest spots are Northland, Auckland, and the upper South Island; especially Christchurch, where investor activity is humming in the under $300,000 segment.

Babette Newman, Bayleys’ Wellington residential manager, says there’s a “huge increase” in attendees at open homes and multiple offers being made on properties in the capital too – particularly those over $800,000.

Typical responses in BNZ’s latest confidence survey, which compiles feedback from around the country, included: “Property investment is going crazy … Have had more than 100 people through most properties in the first weekend of open homes … Everything is booming under $400,000 with homes being snapped up in just a few days from listing and multi-offers across many properties.”

For the past four weeks, Barfoot & Thompson has averaged a 65-70 per cent auction clearance rate. Six months ago, this had reached an all-time low of 30-35 per cent.

Director Peter Thompson says: “The auction room in the city on Wednesdays has witnessed activity never seen before in these premises – standing room only spilling out into the foyer,” and only a small portion of these are mortgagee auctions.

Ray White’s Smith reports a 68 per cent auction clearance rate – again a doubling from last year.

Residential real estate is once more “so alive,” Jaffe says. “The investors are back; open homes are full, listings are short – and there’s buyer competition.” Alistair Helm, chief executive of realestate.co.nz, confirms new listings in March fell 19 per cent compared to a year earlier.

The local housing market is benefiting from tough economic conditions abroad, says John Wills of Custom Residential.

Broker Charlotte Lockhart of Mike Pero Mortgages, who’s arranging finance for expat buyers weekly – mostly those living in the UK – doesn’t think expats feel their money is safe there.

Looking for a place to put it, they’re settling for a bolthole back home while the exchange rate is favourable. Realestate.co.nz’s Helm reports an 11 per cent increase in website visitors from the UK viewing rental properties.

Wills says Custom Residential’s website has seen a “massive increase” in offshore inquiry about properties in the hotspot of greater Ponsonby. Total traffic volume more than doubled during February and March.

“Kiwi professionals are returning home and having to compete with existing local buyers for the best property,” he says, with the “executive” home buyer demographic being “incredibly active” on the greater Ponsonby house-hunting circuit.

Wills says of the surge in active buyers: “It feels a bit like going ‘back to the future’, with open home numbers and a buyer pool similar to what we saw in 2005 and 2006.”

Competition for good property is “one step away from being described as fierce,” he says – but heading in that direction. In the meantime, he says most properties listed with his agency become the subject of multi-offer negotiations. For one recently listed property, the first open homes were held on Saturday and Sunday of the same weekend, and four offers were made on the Monday.

An agreement was reached about 9.30pm that evening. “This is quite typical of what we are experiencing out there at the moment,” says Wills, reminiscent of the activity peak during the last boom.

The question is whether what he calls the market’s “serious momentum” will continue through winter.

Smith says it can’t be underestimated that “sales create sales”. The favoured two-year mortgage interest rate remains 2 per cent below its long-term average and the one-year rate almost 3 per cent below average.

The rate of new houses being built has hit a 65-year low, and market watchers agree if immigration remains solid and interest rates stay low the market will continue trading at more normal levels.

Offshore Kiwis quids in

Expat Kiwis Michelle Bradley, an accountant, and her builder fiance Greg Wdowikowski, both in their early 30s, were living and working in London when they decided to buy their first investment property in 2007.

“We saved our deposit and bought a rental property in Hamilton, and it has great rental return of $300 a week.”

Despite the fact they “bought off the internet” without viewing the property, they got a LIM and other property reports beforehand.

They enlisted help from Auckland-based broker Jodi Cottle of Sable Mortgages, who runs regular seminars in the UK for expat buyers looking for property in New Zealand. Seminar numbers are limited to 200 – and they’re always full. Interest in the seminars is so strong, Cottle doesn’t need to advertise them.

With the pound’s favourable exchange rate, Bradley says it was “so much easier for us to do this from Britain than if we were living at home”. A year ago, Bradley won a green card in the US ballot and the couple relocated to New York.

Searching New Zealand websites for new listings daily, they’re about to buy a more expensive “four-bedroom, executive-style home” on Auckland’s North Shore.

“What makes it so enticing is the quality of home that we can buy there on the US dollar, and the lifestyle we may eventually come home to.”