Welcome back to 2012 – after a ‘summer’ holiday break which rather reflected New Zealand’s real estate markets…. that is to say conditions were markedly different around the place depending on whereabouts you were in the country.
In most of the residential property regions, for example, with the slight exceptions of Auckland and Christchurch, lower-than-average stock listings and sales volumes, combined with flattish prices mean the mood is subdued and market sentiment is uncertain.
Those lower-than-average housing stock levels in Auckland though are proving to be a double edge sword. While they do to a certain degree underpin pricing, many wanting to sell are reluctant to take their property to market because their on-going selection is limited.
Further south, while ‘quakes continue to rattle Christchurch, an increasing amount of capital is making its way to the property market as insurance relocation pay-outs come to fruition. We expect to see growing demand for both housing and bare land stock in this region of the housing market. A consequential increase in the supply of bare land is already evident.
Damp weather throughout the upper part of the country this holiday period dampened the traditional buzz of buying interest for baches and holiday homes in coastal and lake towns such as the Bay of Islands, the Coromandel, the Rotorua/Taupo lakes district, and Nelson Bays. Fine spells toward the end of January have given this sector somewhat of a belated kick-start.
Conversely though, Queenstown and Central Otago – undoubtedly buoyed by the higher than average number of sunshine hours - reported stronger than usual numbers of visitors showing an interest in the open homes which ran over the holiday period.
As the cliché goes, behind every dark cloud is a silver lining, and the weather across most of the North Island was no exception for the rural sector.
At a time of the year when grazing pastures have traditionally been turning brown and wilting under the relentless summer sun, this year’s bountiful rainfall meant that the heavyweight dairy production regions of Manawatu, Taranaki, King Country, Waikato and Bay of Plenty were blessed with lush green pastures covered in grass.
This has boosted production confidence early in the year in these areas and underpinned the gradual return to the rural real estate market confidence that was building throughout 2011. The counterbalance of course has been that Otago and Southland have instead undergone prolonged dry spells.
A number of Mid and Lower North Island receivership farm sales being drip-fed to the market in a controlled fashion over the coming weeks will continue to see plenty of choice offered to potential buyers, and this should see a healthy injection into sales volumes as concluded deals are recorded in the second quarter.
Meanwhile, activity in the commercial and industrial property sectors, has been muted – as it always is during any January period.
With most of the country’s accountants, legal professionals and business advisors taking their annual Christmas and New Year holidays running well into the final quarter of the month, this sector of the property market is always the last to return back to business en-masse. And this year has been no different.
I’d say that expect commercial and industrial sales activity to pick up from February onward, but that leasing activity will remain relatively even-keeled as business plots a ‘steady as she goes’ course until the end of the financial year.
Mike Bayley
