Preparing to Sell

Before you open your home up to potential buyers, you need to consider both the presentation of your home and how you would like to present your property through marketing material. Buyers don’t always get past the initial look, and might not take the time to see the true potential of your property. 


Preparing Your Home For Sale

Here’s a list of some of the areas buyers may be looking at when they walk around your home, all of which can be easily fixed:

  • Paint work – is it marked, old, or chipping in some areas? Sometimes a lick of fresh paint can make a room look brand new
  • Carpet – although more expensive to change outright, if it’s looking dirty or tired consider getting it professionally cleaned.
  • Garden and lawns – a poorly maintained garden and overgrown lawns can give an impression of the property being neglected.
  • Doors and windows – this might seem trivial, but a lot of people will open most doors throughout the house to see what’s behind them, and even open some windows. Make sure they aren’t sticking or damaged in any way.
  • General cleanliness, especially through the kitchen and bathrooms, and including animal hair – some buyers will get turned off if they see that a place hasn’t been looked after well as they want to try and picture themselves living there. Before an open home make sure you scrub the bathroom/s and kitchen, take a duster round the living areas and vacuum the floors. You may also want to consider cleaning any windows.
  • General clutter – if you have a lot of stuff and it’s cluttering up your house, try to tidy it up or put it away before anyone comes around. By doing this you may help to give a room spacious more spacious feel, and you might be able to highlight storage solutions in your home, which is always beneficial.
  • Smells – it seems simple but bad smells can put a buyer off and it might not even relate to your property. Make sure any rubbish is put out and anything that may potentially create a bad smell cleaned up. Even things like avoiding cooking particularly smelly food right before someone views the property can help.


Marketing your property

Whether you sell privately or through an agent, deciding on what kind of advertising and marketing you want to do will can affect the audience you reach and of course the cost.

  • Print advertising. Print advertising can come in various forms but some of the more commons ones include Property Press magazine and local papers. However, you have to remember that:
    • It can be expensive depending on your needs, ie how often the ad features and the size of the ad
    • It only captures your immediate, local audience, which is beneficial if you want to target your area but limiting if you want to attract a wider range of buyers
  • Online advertising. Online advertising has become more important in today’s real estate space, with sites such as Trade Me Property and Open2view becoming very popular. Online advertising can offer:
    • Cheaper advertising space, although your ad can end up being one of many in a long list
    • A wider audience reach - although this can also mean you end up with a lot of views of your ad but with no real leads, as people are just browsing
  • Property signage - Regardless of whether you choose print or online advertising, or both, another common form of marketing is a ‘For Sale’ sign. This is usually positioned out the front of your property. It’s an easy way to let passersby know your house is on the market and it also highlights your house to people trying to find it after seeing it in advertisements elsewhere.

Each option needs to assessed as to the number of potential buyers you can attract through it, and whether they’re the right buyers for your property. The cost also needs to be looked at, but this can be weighed up against whether that method attracted your buyer. More often a combination of different advertising and marketing will be suitable, and if you are using a real estate agent they will advise and help you with this process.

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In the first quarter of 2019, first home buyers (FHBs) and mortgaged multiple property owners (investors) each accounted for 24% of property purchases. For a long period of time, investors had a much larger market share, but LVR III (40% deposit) dampened their activity from October 2016 and meanwhile FHBs have slowly and surely kept raising their presence. This is not to say that there is always direct competition between the two groups, or that an investor buying is always locking out a FHB (or vice versa). But it’s still interesting that their market shares are similar and these may well continue to be the two groups to watch for the rest of 2019.
CoreLogic Senior Property Economist Kelvin Davidson writes:
The Q1 data for Buyer Classification is now complete and it confirms that ‘movers’ (existing owner occupiers) are less active than in the past, with first home buyers (FHBs) and mortgaged multiple property owners (MPOs) the key groups of interest at present.
Over the first three months of the year, ‘movers’ accounted for 27% of property purchases, which is down a touch from 28% a year ago and from 29% in Q1 2017. With the next step up the property-buying ladder still hard to achieve – e.g. due to the transactions costs (legal, estate agent), as well as any extra equity/debt required – it’s not really surprising that more movers are happy to stay put, and perhaps renovate instead.
NZ % share of purchases (Source: CoreLogic)
Meanwhile, as the first chart shows, the gap between FHBs and mortgaged multiple property owners (MPOs, or investors) remains tight, with both sitting on 24% of purchases in Q1 (albeit at one decimal place MPOs are slightly ahead of FHBs, at 23.9% versus 23.7%). From the LVR III-induced trough for mortgaged MPOs of 22% in Q4 2017, they’ve slowly crept back into the market on the back of more finance becoming available again. And their comeback is despite several new rules from the government which have raised costs (e.g. extra insulation, changes to negative gearing).
Auckland % share of purchases (Source: CoreLogic)
For FHBs, although the strong upwards trend from 2014 to mid-2018 has flattened off in the past 3-6 months, their share of purchases is still high in an historical context. The ability to tap their KiwiSaver funds for a deposit, alongside a willingness to compromise on location/property type, are key factors keeping FHBs’ share of purchases high. CoreLogic figures show that as part of that compromise, FHBs are entering many markets around the country at prices 15-20% lower than the area’s average.
Wellington % share of purchases (Source: CoreLogic)
The national patterns largely apply in Auckland with movers relatively quiet and mortgaged investors ‘hanging in there’. What is an interesting aspect of the Auckland market at present is that despite average values being >$1m, FHBs are not just a strong presence, but they’re actually the largest individual buyer group with a 27% share (see the second chart). It’s a similar story in Wellington too, albeit in the capital mortgaged investors have perked up lately and their share of purchases (30%) has risen back above FHBs (see the third chart).
 Lower Hutt % share of purchases (Source: CoreLogic)
Although FHBs still have a decent presence in Wellington City, one clear option for those priced out is to purchase in the Hutt Valley and this is something that’s often heard about anecdotally. But our stats illustrate it emphatically – as the fourth chart shows, FHBs have a very strong market share in Lower Hutt (as well as in Upper Hutt and Porirua).
We’ve been asked a few times whether the dips in average Auckland property values lately reflect weakness in the top end of the market or the lower end. In fact, it’s not so much about high versus low value brackets within each area; it’s more about the areas themselves. The sluggishness of overall values has been centred in Auckland City and North Shore, with Rodney and Papakura as examples still increasing slightly. No real surprises there, given that affordability is the worst in the first two areas.
CoreLogic Senior Property Economist Kelvin Davidson writes:
Auckland’s average property value has fallen by 1.5% over the past year. That isn’t a full-on downturn, but given low affordability and high levels of listings (hence plenty of buyer choice), it’s not surprising that pricing is ticking down to get some sales over the line. This is something we’ll be keeping a very close eye on. But within that sluggish overall picture, we’ve been asked a few times about how the various segments of the market are faring, in terms of low value versus top-end properties. Are the highest value properties dragging down the market, or is the lower end the culprit?

Manukau - annual % change in median value by 20% quintile value brackets (Source: CoreLogic)
So to get stuck into the data, ever since Auckland’s market as a whole stopped rising (late 2016), it’s actually been a pretty consistent story across different parts of the city and across the value bands*. Take Manukau for example, where all the value brackets have had similar growth rates in the past two years or so, albeit with lower value properties tending to outperform, as they were also doing very clearly in 2015-16 (see the first chart).

North Shore - annual % change in median value by 20% quintile value brackets (Source: CoreLogic)


North Shore has displayed a similar pattern in terms of a tight growth range across the value bands, albeit with more of those brackets now displaying price falls (see the second chart). Of course, within these value bands, there will also be greater divergences – e.g. we know from the CoreLogic QV House Price Index that some properties in North Shore Coastal are dropping more sharply.
Looking at things in a different way, we can cumulate the changes over the full five-year period and this reveals other interesting patterns. In Auckland City (old territorial authority area) the rises have been relatively uniform, ranging from 43% in the lowest quintile up to 48% in the highest. By contrast, in Papakura, there’s been much stronger gains for low value property (68%) versus high value (45%) – see the third chart.
Total % change in median property values by quintile (Source: CoreLogic)
So when you look over a longer history, cheaper property within generally cheaper areas has risen more strongly than the more expensive areas (note that the median value for the low to mid band in Auckland City is $996,000, $20,000 higher than even the top band in Papakura of $976,000). Of course, that’s not surprising, given that it’s more affordable and has had some scope for ‘catch-up’ growth.
Even after that period of outperformance by lower value stock, however, the ratio of high to low values in places like Waitakere and Franklin is still much lower than Auckland City for example (see the fourth chart). In other words, there may be some room here for lower value property to continue to outperform higher value segments across much of Auckland over the coming years (even if that takes the form of only small price rises while top-end properties flat-line or tick lower).
So what does this all mean? The bottom line is that Auckland’s recent weakness in overall property values isn’t so much about high versus low value property within the different areas, but more about the areas versus each other. Auckland City and North Shore are generally the weakest and are outweighing continued small rises (or flat values) in cheaper areas such as Rodney and Papakura.


Rental growth is now outpacing property values. Interestingly, the highest rental yields can now be found outside the main centres. Simultaneously, the 10 lowest yielding suburbs are all located in Auckland. Factor in the dip in values in these expensive parts of Auckland, total returns over the past year haven’t been that flash. Meanwhile, the tax ring-fence on rental property losses (which kicked in on Monday), will also knock the returns for some investors, although we don’t anticipate that it will have a major market-wide impact.
CoreLogic Senior Property Economist Kelvin Davidson writes:
After a long period where average property values rose more quickly than rents, and hence gross rental yields fell, the situation has been reversing a little in recent months (see the first chart). Since the start of 2018, rents have been outpacing property values, and in the year to February 2019, the rise in national rents (5.6%) wasn’t far off double the increase in values (3.0%).
Change in average property values and rents (Sources: MBIE and CoreLogic )
Of course, it needs to be noted that this hasn’t been due to a pick-up in rents (which are often anchored by tenants’ income growth, which lately has been subdued), rather the slowdown in property value growth. But either way, gross rental yields have begun to tick upwards again (see the second chart) and, although they’re still low (3.3%), that will start to look more appealing to potential new investors in residential property.
Gross rental yields (Sources: MBIE and CoreLogic)
So how do things look around NZ and what’s happening to investors’ total returns* (i.e. rental yield + value changes)? Starting with the 10 suburbs/towns around the country with the highest gross rental yields**, shown in the third chart, we can see that there are some pretty attractive numbers on offer to landlords – such as a yield of 9.0% in Wairoa (Wairoa District) and 8.7% in Appleby (Invercargill City). Add in the growth that some of these areas have also seen in property values over the past year and the total returns look even more impressive – typically at least 20% for the areas in this list.
Gross rental yields and total return (Sources: MBIE and CoreLogic)
At the other end of the spectrum, the lowest yielding suburbs are unsurprisingly all in Auckland (see the fourth chart). Herne Bay, for example, only has a gross rental yield of 1.3% (weekly rent of $650 and property value of $2.59m) and when you also factor in its dip in median values of 2.3% over the past year (as well as the fact that gross yields don’t account for all the usual operating costs of being a landlord), total returns start to look a bit depressing. Orakei, Devonport, and Epsom also stand out for the wrong reasons on this measure - of course, given the huge capital gains that these suburbs have seen over the longer term, a negative total return over the most recent 12 months probably hasn’t been a huge concern for too many people.
Gross rental yields and total return (Sources: MBIE and CoreLogic)
Looking ahead, it wouldn’t be a surprise to see gross rental yields continue to rise in the coming months, as property values remain subdued and rents maintain their normal consistent pace of growth. Given the extra regulations and costs currently being imposed on landlords by the government, a rise in gross yields would clearly be a welcome trend for many investors. Of note is that the tax ring-fence for rental property losses came into force on Monday, so we’ll be watching closely over the next few months for any signs that investors are altering their behaviour, such as buying fewer properties and perhaps selling some of their existing holdings.


NZ Property values have grown by only 0.5% this calendar year, with the annual rate of growth slowing to 2.6% at the end of last month.
According to the CoreLogic QV April House Price Index results, Auckland values continue to fall, with the index dropping 0.4% in March.  This takes the annual figure to -1.5%, which is the biggest annual fall since the Global Financial Crisis 10 years ago. For full context though it’s worth noting that aside from minor monthly fluctuation, values have effectively plateaued for two and a half years now and across the Super City the average price is still higher than in September 2016. This is when the property party in Auckland essentially stopped, with funding considerably tightened, both by way of higher loan-to-value ratio requirements and more stringent bank expense testing.
Index results as at 1 April 2019
Head of Research, Nick Goodall says that “Low affordability in conjunction with responsible lending standards and high levels of listings meaning plenty of choice for buyers remain an ongoing drag on Auckland’s property values. We had already seen a significant drop in sales volumes (14% drop compared to the previous summer) alongside an extension in the median number of days to sell a property (58 in February according to REINZ), so with values also declining it appears some vendors have been adjusting their expectations when it comes to achieving a successful sale.” 
“Growth across the rest of NZ’s main centres has also shown some moderation, with the exception of Tauranga where values were up by 1.1% according to the monthly index at the end of March.”
Rolling change in property values, national
Similarly, nearby Rotorua bucked the trend of general moderation in growth among the other main urban areas with annual growth surging to 12.6% from 9.4% at the end of February.
The most interesting development in relation to the property market over the last month was the Reserve Bank’s change of stance on the potential future of the Official Cash Rate (OCR). 
The introduction of the sentence ‘the more likely direction of our next OCR move is down’ as part of their release last month came as a surprise to many commentators and is good news for current and future mortgage holders. 
The OCR is only one factor influencing mortgage interest rates, and it’s unlikely they will fall any further off the back of any OCR drop  - due to other bank funding costs, but it does push out the horizon for a potential increase. This provides more certainty for those owners currently paying a mortgage, likely at very low interest rates. And it may also guard the Bank against the probably of rates rising if and when they increase the capital requirements of the retail banks.
The detailed House Price Index results reveal where the weakness in Auckland is most keenly felt, with the more expensive Coastal North Shore (average value 1.36m) seeing a 4.1% drop over the last year. Meanwhile for the Onewa area within North Shore (average value $963k) values decreased by only 0.8%.
There’s a similar split in the old Auckland City area, with the more expensive eastern area, (including Remuera and Epsom), with an average of $1.54m, decreasing by 1.6% annually compared to a 0.4% drop in the ‘cheaper’ southern area (including Mount Roskill and Onehunga) with an average value of $1.09m.
In the east of Manukau (average value $1.14m) the trend continues as values here are down 2.0% in the last 12 months compared to a minor drop of 0.3% in the North West (average value $777k).
The Hibiscus Coast, with an average value of $928k, is the only part of Auckland to see growth over the past 12 months (0.9%). 
Elsewhere, the inconsistent growth in both Hamilton and Tauranga has continued, with Tauranga experiencing a stronger March but longer term more constrained growth. A modest rate of 3.7% annual growth epitomises the last 18 months when the annual growth rate has bounced around between 1% and 5%. In Hamilton the annual rate picked up in September 2018, has moved between 4% and 6% since, and ended March 2019 at 4.5%.
In Dunedin, the annual growth rate of 13.3% remains the highest among the main centres, however the rate of growth did slow from 14.3% the previous month.
Property values in the wider Wellington region have recently seen greater growth than the other main centres in the North Island and that held true according to March’s index, with the annual rate shifting sideways to 8.4%. Within the region the more affordable Upper Hutt City (average value $$542k) has seen the greatest growth over the past 12 months, at 12.3%.
House Price Index, Main Centres Relative to December 2003
Further north in Whanganui, property value growth appears to have run out of steam with values in the first three months of 2019 dropping by 2.0%. This has eaten into the significant growth experienced throughout much of 2018, however the annual growth rate remains relatively high, at 11.8% to the end of March 2019.
In summarising the current market and outlook, Goodall said: 
“Not much changed from the prior month in terms of property value change, however the wider property market environment holds its intrigue. The proposed ring-fencing rules relating to loss-making residential investment properties are still working their way through parliament, but if enacted will apply for the current income year (1 April 2019- 31 March 2020) so assuming they pass into law they will need to be understood by investors now (although they won’t file their tax position until next year).
Later this month we’ll hear the Government’s official response on the Tax Working Group’s Report, with plenty of interest in their proposals for a more comprehensive capital gains tax for residential property.
Within the next month we’ll also get our first real insight into the impact of the foreign buyer ban from late last year as Stats NZ release their ‘Property Transfer Statistics’ by NZ tax residency for the first quarter of 2019. We’re expecting to see confirmation of the ban’s effectiveness, which the recent reduction in sales volumes had already hinted at  - particularly in Central Auckland and Queenstown.
Annual change in dwelling values Provincial Centres
And of course - we’ll then look towards the Reserve Bank’s next OCR decision on May 8. Their foreshadowing of a cut at some stage has many economists predicting one as early as the May date and possibly even another before the year is out. 
All of this illustrates where our focus remains  - on the Government and Reserve Bank as opposed to the usual macro-economic factors (mostly benign) and even international pressures (due to our relative insulation at this stage). In the end, the outlook remains one of a gradual easing in property values for the rest of the year”. 

This month we review what happened to property values over the summer months and provide our take on the recommendations from the Tax Working Group.