The latest economic lockdown the country has been placed in – particularly that imposed on Auckland – will not see the residential housing market stopped in its tracks as it was when the country first went into lockdown in March.
Throughout the most recent lockdown, property has been listed, viewings undertaken, property bought and sold, and the financial and administrative paperwork undertaken.
In April of this year the Real Estate Institute reported that only 1305 properties were sold countrywide, a decline on those sold in April 2019 of close to 80%.
While data around August sales nationally will not be known until mid-September, there is plenty of evidence suggesting that because the real estate profession and the banks were well prepared, trading carried on regardless.
For example, interest.co.nz, reported that during the week August 10-16* two thirds of all homes that went to auction across 275 auction sites it monitored nationwide were sold, either under the hammer or through later negotiation.
In Barfoot & Thompson’s case, during the same week, our clearance rate at auctions (mainly online) was 65%.
What is different about the latest lockdown compared to the first in terms of real estate sales is the profession, and the banking sector, have over the past four months been fine tuning their online trading capabilities. And the public has accepted this new way of doing business.
While for many the move from ‘in-person’ to online trading has been seamless a return to more traditional selling methods will return as soon as regulations preventing it are relaxed.
What it means is that the market will now have an alternative sales approach that will sit side by side with the more familiar way of doing business.
The lockdown has through necessity ushered in the start of full, online property trading a little quicker than may have otherwise happened.
Much of the groundwork that has made online trading possible has been quietly developing in the background for a number of years, and since April the banks and the real estate profession have been working on the final pieces around aspects of online selling such as auctions, final inspections and the legal paperwork.
A media headline that has crept back into media coverage of the prices being paid for residential property recently is homes selling for well in excess of their CV (capital value).
Whenever I read such headlines, the first thought that comes to mind is ‘what made that property so attractive that it commanded such a premium’.
It needs to be that remembered that CVs are only a general indication of the value of a property for rating purposes and are not property specific valuations. CVs are based on the sales price of properties sold in the local area at the time the last valuation was undertaken. Currently, valuations are based on prices prevailing three years ago.
A variety of factors can contribute to a property selling for more than, or below, CV.
On the upside, factors could include recent planning changes around development potential, modifications or improvements, buyer appeal, more than one buyer determined to own the home and hence creating a competitive market, and changes to prices across the whole area.
Conversely, some CVs could be inflated given the true value the property offers, the condition of the property or changes to the area’s attraction through school zoning changes or the area’s general loss of appeal.
There is no substitute for a property specific valuation, or baring not wishing to pay the fee, drawing on the expertise of your real estate agent who will be well versed in sales prices being achieved for similar local properties.
*The latest lockdown was imposed on August 14