Record high for Auckland property market before lockdown, but hope remains

Before the national lockdown, through February and March, the activity and confidence in Auckland’s apartment market was looking very encouraging – a refreshing change from the previous plateau we’d seen during 2019.

This long-awaited lift activated buyers and sellers to make their move. Our listing numbers spiked as apartment owners looked to sell in, what felt like, a revived market. Investors started re-appearing, driven predominantly by the high yields and record low interest rates from most major banks. And the increase in listings energised our team, putting them on track for their best sales month in recent times.

Then came the lockdown which has, understandably, seen things slow down considerably. But despite this, we are continuing to see activity in the market, with early signs indicating a positive resurgence following lockdown. 

Our team has been on the phones with many apartments owners offering advice and assistance wherever possible, which has been warmly received. We’ve also spoken to lots of people who see the lockdown as an opportunity to learn about Auckland’s apartment market. So, overall, we are very optimistic about what lies ahead.

In the meantime, from all of us at Ray White City Apartments, Wynyard Quarter and the whole City Realty Group, we hope you’re all staying safe and looking after each other. And please know that we are here to help in any way possible, just give us a call.

Cashed up and ready to go - oneroof.co.nz

This week Ray White's chief operating officer Gavin Croft, who was in quarantine in Brisbane, successfully sold a property in Auckland, with technical support from Sydney. There were three registered bidders for the Grey Lynn home, which sold under the hammer for $1.45 million.

A Ray White agent sold a 1930s bungalow in Waiohua Road, Greenlane, at an online-phone auction run by company auctioneer John Bowring. Seven registered bidders bid over the phone, all watching on Google Hangouts. The final two bidders drove the final price to $1.55 million, well above the CV of $1.275 million.

The buyers were cashed up and ready to go. It’s their time and they’re not worried about it - they’re going to live in this house for some time,” says Bowring.

“We asked them afterwards [about the process] and they said they felt completely comfortable, it was a much safer way to do it.”

Homeowners and Mortgage Holders - Loan Market update from our in-house brokers

If you are challenged with making mortgage payments due to a reduction in income (see down below for COVID-19 Wage Subsidy link), there are a few options to try before going on a mortgage holiday. Note: this is not actually a holiday where you don’t have to pay principal and interest for 6months, it’s actually a mortgage deferment which accrues and compounds and ends up costing you thousands more at the other end – see example further down).

Options to consider first:

• Extend length of your loan term back out to reduce P&I payments
• Go on Interest Only instead of Principal & Interest (benefit of this is the balance of your mortgage will still be the same as it is today at the end of the interest only period)
• Review your current rates (eg. break high rates for lower rates if feasible
• Fix in Floating portions of your home loan onto lower rates)
• Get a top up against your home to buffer the next few months (if servicing allows)
• Apply for Temporary Overdrafts for 90 days $1-5k for personal, business, home
• Mortgage repayment deferments (holidays) as a LAST RESORT as it costs you thousands in compounded interest – see example below)

Interest rates have come down to record lows (at the time of this email, main lenders are around 3.05%-3.09%) following the Reserve Bank dropping the official cash rate to an all-time low of 0.25% and Floating rates across most main banks have dropped 0.75% to reflect this.

The Government and banks have also agreed to give impacted mortgage holders, a six-month payment holiday on both the interest and principal of their mortgages. 

Be wary though, there is no such thing as a holiday. It's actually a deferment where the money will either be added to your outstanding balance or your mortgage term will be extended. 

If you were about to buy a property

Don’t discount your plans just yet. Interest rates are very attractive and there are some attractive properties on the market. 

The New Zealand property market was holding up well in the early stages of COVID-19 and had been experiencing strong price growth over summer. With banks and the Government coming together to support workers, businesses and the risk of property owners losing the shirt off their back or the roof over their head reduces, minimising the risk of a market crash. 

Logistically however, the lock down proposes challenges around open homes and auctions and also access to professionals such as solicitors. I can help you navigate these disruptions to still get an outcome. 

Interest Only vs Mortgage ‘Holiday’ (Deferment)

Get in touch today if you have question about the property market in these unsettling times.

raywhitecityrealty.co.nz