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17-10-2015

Buyer classification provides a new level of understanding

 

Jonno began analysing housing market data in 2007 and there is much more data available now.  It feels like we are on the edge of something changing.  What is the real data about what is pushing the market – Jonno is keen to find out.  A plural of anecdotes is not data.

Jonno has done work on buyer classification – who has bought what – and this provides a new level of understanding.

It is thought that Auckland investors are still strong despite anecdotes.  Investors are most active in Auckland, Christchurch and Northland,

In fact investors buy lower quartile properties right across the range.  Those with bigger portfolios are likely to invest in higher value properties. Newer investors are likely to purchase lower value properties.

Auckland first home buyers are paying a premium.  They are driving the Auckland market.

In Auckland properties tend to be sold within 3 years.  This is a higher level of turnover than in the rest of the country.  Everyone is doing it and getting on the bandwagon.

It is thought that Aucklanders are flooding the market but is that so? Where do the sellers go? They go to Tauranga (25%), Hamilton and Waikato District.  85% of sellers in the Auckland market have been selling down. 60% move into the Waikato District, just over the border to places like Pokeno and Huntly. Auckland movers and investors hit Hamilton at all levels. Auction process has moved south too whereas sales are still by negotiation in Whangarei.

Bank valuation activity is slowing in Auckland and is stronger in Hamilton. The level of Auckland property listings is slowing.  The Auckland market has turned. 

Auckland market has moved like the markets in Sydney and Melbourne. If you look at Auckland through foreign lens then all New Zealand house prices have dropped in terms of their currencies.  There is the potential for more money to come out of China to New Zealand.

In summary:

  1. The Auckland market is slowing.

  2. Reserve Band measures and current restrictions on taking money out of China re driving the slow down.

  3. The shortage of houses not easily fixed.

  4. Auckland prices keep movingup but at a slower pace.

  5. Aucklanders are increasingly moving out and investing elsewhere.

  6. Sales activity in the regions is continuing to strengthen.

  7. Values will not increase as they have in Auckland for an extended time.

  8. Don’t overlook the colossal amount of money still to flow from China.

Tags: housing affordability

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