Coalface Commentary: What’s Happening in the Auckland Real Estate Market?
After a 2 to 3 year period of stalled value growth, I feel that the Auckland housing scene is waking up from its slumber and moving upward. Read on to find out why…
If you’ve followed my blogs & newsletters from early 2017 until late 2019, you’ll know the general ‘vibe’ of the Auckland housing market has been pretty flat, with subdued buyer activity and low numbers of property listings.
Has anything changed since the start of 2020? The short answer is – YES!
For my views from ‘the coalface’ of the real estate market, please read on…
The first signs of change were noticed in the period from October 2019 through to the Christmas holiday season. Out of the blue, there was a noticeable upturn in buyer activity. Rather than just viewing homes, buyers seemed more motivated to put pen to paper and secure a deal.
The big question was “why?”. There had been no significant change to the drivers that influence the housing scene around Auckland. Mortgage interest rates were consistently low (nothing new), the supply of new homes was still restricted (nothing new), net migration remained strongly in the positive (again – nothing new), and the dark cloud of a new Capital Gains Tax had been dumped by the current Government. All of these factors had been present for a long time, and yet the market had remained flat — so why the sudden upturn?
My answer can be summarised in one word – SENTIMENT.
In my observation of the housing scene in Auckland, sentiment has a massive influence on activity. How buyers & sellers perceive the market to be is pretty much how it ends up being. So, as soon as I started to notice a more positive tone of commentary from various market analysts (via media reporting), I was pretty confident that things were about to change.
The impact of a more positive outlook for 2020 had two immediate impacts:
So, the sentiment (the positive feeling about the market) and the related media commentary drove the actions of many. The subsequent actions of those people (mainly buyers) delivered on the predictions made by the analysts.
This interconnected circle is a really interesting observation in human behaviour (if you are into that sort of thing!).
Fast forward to early 2020. What has happened since the return to normal trading after the extended holiday season? Has the market continued to show signs of recovery? The short answer again – YES.
I had wondered if the holiday break may have stalled the momentum which had built up in the 3-months before Christmas. This thought has been answered very quickly as listing after listing in the new year has gone under contract very quickly. That increased market activity has continued to gain energy over late January and February, resulting in reduced average days on market, lots more active bidders and higher clearance rates at auctions and multi-offers being quite common on new listings.
The next big question – will this market upturn continue through the remainder of 2020?
I have always said that if I could answer this type of question with 100% confidence, I would be a property speculator, rather than a real estate agent! For what it is worth though, again my answer is – YES.
After a 2 to 3 year period of stalled value growth, I feel that the Auckland housing scene is waking up from its slumber and moving upward. All the critical market drivers seem to be locked-in. The only ‘fly in the ointment’ may be the General Election later in the year. Even then, the interruption to strong trading will likely only be short-lived…
So, from what I can sense at the coalface, here are my recommendations: