What's it Worth?

There are a number of ways to understand the value of your property ranging from free to a few hundred dollars. You can go it alone and compare properties with similar rating valuations and features in the area that have sold recently, you can get in touch with your local real estate agent for an appraisal, purchase an E-valuer or a Full Market Valuation or both. A combination of a few of these options can give you a good indication of what your property will likely sell for.

Any Renovations or Additions?

Two houses in the same location, of similar size and with the same reserve price, can sell for a big difference in value. It begs the question, how do you add the most value to a home, and what value do high specifications add in today’s property market?

It may be worth spending more on “high spec” features for homes at the high end of the market, but for more modest priced homes you have to be careful not to over-capitalise, or overspend on improvements that won’t increase the value of your home.

Whether or not “high specification” adds value differs between suburbs and value ranges because of the demographics of an area. Different buyers value different things.

Spending money on kitchens and bathrooms will usually add value to a home. But if you want to know whether to spend $10,000 or $30,000 on your bathroom makeover you need to consider the overall value and location of your home. On a higher priced property you are likely to add at least the value of a ‘high spec’ bathroom but at the lower end then you might be better to spend $10,000 instead. A modern kitchen that doesn’t break the bank will still add value to a home. But if you spend $40,000 on a kitchen in a modest home, you may not get the same value back.

Relaying carpet or replacing the roof won’t add value to your property, carpets are a chattel and roofs fall under repairs and maintenance. A roof is expected to be functional and do its job. You will lose money if leaks otherwise it is just a cost. You wouldn’t replace a roof unless it’s needed. As long as the roof of the dwelling is well maintained, functional and in reasonable condition the value will not be impacted by the roof.

Landscaping can add a significant amount of value a property. However it may not be a direct relationship between value spent and value added. The added value of well-presented landscaping is generally on the overall saleability of a home through increased street appeal/utility. It is a great way to get potential purchasers through your home on open homes.

In regards to how much should be spent on landscaping, again it depends on the overall value level and type of property. The market expectation of the level of landscaping in a high value suburb is significantly greater than that of a lower value suburb.

The nature of the property can also dictate the nature of the landscaping and site development utilised. For example if you own a high end character villa you ideally want to keep that timber picket fence out front rather than replace it with something more modern.

Property owners should consider the nature of their property and the wider neighbourhood before commencing any major landscaping works.

Another example of this could be replacing timber joinery in a villa/character bungalow with modern aluminium joinery as this does not enhance the character and detracts from the value.

Garaging is another element that is also very dependent on the locality of the property. In areas which have larger land sites and generally more space, a new garage may not add much in value. However, in inner city suburbs where land is at a premium and the lots are much smaller and off street parking is scarce, a garage could add a significant amount of value to your property.

If you have done significant work it might be worth investing in a Full Market Valuation to get an understanding of the worth of your property.

Valuation Options

Rating Valuation

  • only updated every three years for the purpose of your local council
  • established using a mass appraisal process
  • often used when buying and selling as an indicative price.

E-valuer

  • an instant, online estimate of the current market value for a property
  • based on recent, nearby comparable sales
  • often used for establishing the current value when making an offer or wanting to sell your property.

A Full Market Valuation is:

  • completed by a Registered Valuer
  • based upon a full inspection of your property as well as related sales in the area being analysed
  • typically used for a variety of reasons, including securing finance when buying

For more information visit Valuations and Reports

Understanding the Market

Deciding the right time to buy or sell doesn’t have to be a guessing game.  By getting to know the market as it stands, as well as the general trends that have long been established, your end goal, be it buying or selling, can hopefully be achieved within your required timeframe. 

Buyers’ vs sellers’ market

One thing to look at when you decide to enter into the property market is whether your area is currently a buyers’ market or a sellers’ market.

In simple terms a buyers’ market benefits the people looking to buy a property. Generally, there are more properties on the market than buyers. Sellers are essentially vying for their attention as sales are harder to come by in this environment. Buyers can benefit through increased negotiations over price as well having more choice and less competition regarding the properties they are looking at.

A seller’s market on the other hand is essentially the opposite. There are multiple buyers looking and fewer properties for sale. This generally forces more competition and can increase sale prices as a result.

If you are selling and buying at the same time, it can be a bit of a balancing act depending on the current market environment. For example, if house prices are generally on the rise this can be great for when you sell. But it also means you may be forced to pay extra, or over the odds, for a property when you buy. Reversely, if house prices are low you may get a good deal buying but when you come to sell you own, it may not reach your full expectations.

You can get an idea of how the market is playing out by keeping an eye on our latest monthly value statistics and market commentary. You can also register with us to receive them as part of our email newsletter.

The seasonal impact

Across the seasons, you will generally encounter different times for when it is most affective to buy and sell.

Although each year can differ depending on the economic climate, generally speaking the autumn and spring seasons are when most of the property sales occur. Even what seem like the smallest things, like extra sunlight and warmth, can affect how a house is viewed. As a result these seasons are more conducive to properties changing hands. Summer would seem like a good time also; however, a lot of people in the market can buy or sell before or after, avoiding the busy Christmas and New Year period.

Other factors to consider

There are many other factors you need to consider when you decide to buy or sell a property. Regardless of market conditions and current trends, you need to look at your personal circumstances. If you need to sell by a certain time for example, you don’t have a choice. However, perhaps trying to sell earlier and having a later settlement date, instead of starting to sell close to any deadline date would be a better option.

Some other important factors that you need to consider include:

Economic climate – is the current climate meaning people are holding onto their money?

Interest rates – are they low and making buying an easier prospect for you?

Neighbourhood developments – is a nearby eyesore going to affect whether you buy a property, or how does it impact you when selling? Or is something like a motorway extension or an airport expansion going to affect your home?

Defining features of your property – is there something that sets your property apart from ones nearby? Or, is a characteristic of your property highly sought after at the moment?


Latest News & Articles

Despite Easter/ANZAC being close together and many people taking an extended holiday (rather than visiting the bank), mortgage lending activity was solid in April. Even so, the banks in aggregate are still operating well below the LVR speed limits, and interest-only lending to investors is contained too. Over the next few months, there has to be a decent chance that the scrapping of the capital gains tax proposals and the cut in the official cash rate will provide a further boost to activity in the mortgage market.
 
CoreLogic Senior Property Economist Kelvin Davidson writes:
 
The latest figures from the Reserve Bank (RBNZ) showed that mortgage lending in April was $5.45bn, up by about $80m from the figure of $5.38m a year ago. As the first chart shows, lending to owner-occupiers rebounded a bit in April (after a soft March), but investor lending continues to edge down on a year-on-year basis. As part of the rise in owner-occupier lending, high loan to value ratio (LVR) lending to first home buyers (FHBs) continues to grow, albeit there’s been an inevitable slowdown from the previously very rapid rates (see the second chart).
 
Annual Change in Lending, $m (Source: RBNZ)
 
 
Once again, the number of loans approved across all borrowers was relatively flat, so the growth in lending in April was driven by larger average loan sizes. Meanwhile, the LVR speed limits are still not being tested by the banks (at least in aggregate). The proportion of lending to owner-occupiers in April with an LVR >80% was only 12.6%, well below the 20% cap (see the third chart). Note that it’ll be July before we get the first figures on investor lending at the new, lower 30% deposit requirement (still a 5% speed limit).
 
Annual Change in Lending, % (Source: RBNZ)
 
 
In terms of interest-only lending, activity here remains contained, especially for investors (see the fourth chart). As we suggested in a Pulse last week , it’s not only that new interest-only loans have become harder to secure, but also that banks are more reluctant to roll over existing loans, often preferring a switch to a normal repayment mortgage.
 
So where might things go next? It was probably a bit too soon to have expected the scrapping of the capital gains tax proposals on April 17th to have had much of an effect on the lending figures for last month, but this may well provide a bit of momentum to investor lending and the overall mortgage market in May (data to be released on 27th June). In addition, we’ve had the cut in the official cash rate on May 8th, some of which has been passed through to mortgage rates. Hence, this is likely to also boost borrowing activity to some degree – albeit people still obviously have to raise the deposit, satisfy the income/expense tests, and that they are able to afford to pay at a theoretical mortgage rate of 7-8%.
 
Proportion of lending at high LVRs (Source: RBNZ)
 
To finish off, it’s also worth noting that the final decision from the RBNZ about extra capital requirements for the banks is now expected by the end of November this year and any new rules would start to be phased in from April next year. Interestingly, the RBNZ feels that it has already made a good start on bolstering financial stability, via the LVR rules – see their research here 
 
Interest-only lending flows as % of total (Source: RBNZ)
 
The research also acknowledges that the LVRs did have adverse effects at various times (e.g. disproportionately limiting activity from first home buyers in the early days), but it rightly points out that these were recognised and the rules adjusted accordingly. This week’s Financial Stability Report (Wednesday 9am) may well provide further insight into the RBNZ’s future plans for the LVRs.
 
 
 
 
 
 

 

 
 
Plenty to talk about this month, with the key influencers Government and RBNZ making a few big calls. Wondering about the Capital Gains Tax, Official Cash Rate and Foreign Buyer Ban? We look at the market impact of all. 
 
We also discuss some startling figures on property values in some Auckland suburbs dropping by as much as 30% – spoiler alert – they’re not! Looking ahead we’re anticipating sales volumes to recover a little by the end of the year.
 
 

 

Although it’s not law yet, the tax ring-fence for rental property losses is likely to be approved and, when that happens, will apply to the current tax year (which has of course already started). But there are reasons to doubt that it will dramatically change the rental property landscape. Most notably, it’s only a ring-fence – property losses will no longer be able to offset non-property income, but they can be used to lower tax within a property portfolio. Some investors will undoubtedly be hit quite hard by this. However, other equity-rich landlords may just snap up any sold properties, therefore limiting any adverse effects on the stock of available rentals.
 
This is an adaptation of an article originally written in April for the Auckland Property Investors’ Association: https://www.apia.org.nz/
 
CoreLogic Senior Property Economist Kelvin Davidson writes:
 
The proposed tax ring-fence for rental property losses isn’t in force yet, but it is currently going through the ‘bill to law’ process - which starts with a select committee and then ends up before Parliament for the final stage. It would appear though that this is a mere formality and that when it becomes law the ring-fence will effectively be imposed for the current tax year starting 1st April 2019. In other words, investors need to be accounting for the ring-fence now – i.e. running their sums on the basis that a rental loss can no longer be used to reduce the tax bill on non-property income(s).
 
Mortgaged multiple property owners’ % share of purchases (Source: CoreLogic)
 
Certainly, some investors (especially those new to the game and/or with a big mortgage and hence greater likelihood of a loss) will be hit quite hard by this rule. But on the whole, we’re doubtful that the ring-fence will dramatically affect investor confidence or significantly reduce the stock of property in the rental sector.
 
First, because of the loan to value ratio (LVR) restrictions, investors have required a deposit of at least 30% for several years now and, on average, will be less likely to be making operating losses than in the past – hence, less likely to actually be utilising the tax advantage. Sure, many will still be using it. But it’ll be less common than in the absence of the LVR rules. Second, and perhaps most importantly, it’s a ring-fence, not complete removal. Investors will still be able to use losses to reduce their tax bill, just only within a property portfolio, not against non-property income.
 
National median hold period in years  
(Source: CoreLogic)
 
It’s also reassuring to look back at investor behavior when the depreciation allowance was removed in April 2011. This was also a significant change in the rules around property investment, yet our Buyer Classification figures show that the upward trend in the share of purchases going to mortgaged investors barely paused for breath (see the first chart). To be fair, property price rises more generally were starting to kick into gear again around that time (see the second chart), and these gains may have swamped the effect of removing the depreciation allowance. And clearly, that factor isn’t as strong now, with values flat or slightly falling in Auckland and Christchurch for example, and slowing in many other parts of the country.
 
All that said, another factor to keep in mind here is the tighter availability of new interest-only loans in the past few years, as well as the reduced ability for investors to roll over existing interest-only lending. Given that interest-only loans (and hence lower mortgage payments) are an important tool for negatively geared landlords, it’s conceivable that some will have already looked at their sums (regardless of the ring-fence proposal) and decided to sell properties that don’t stack up anymore. This may have affected rental supply in some areas and would be another factor helping to explain the gradual slowdown we’re seeing in property values around the country.
 
National median hold period in years
(Source: CoreLogic)
 
 
Of course, this would only serve to lessen the potential effect when the new law does actually come into force. Moreover, let’s not forget that just because a landlord sells their property, it doesn’t necessarily vanish from the rental stock – it may well be snapped up by another investor, perhaps with more equity behind them. In addition, rather than selling, landlords may just hold their properties for longer than they planned in order to compensate for the effect of the ring-fence on their expected return. That would just reinforce what we’ve already started to see in the past year or two – that is, investors holding for longer than in the past, and also relative to other buyer groups, such as first home buyers (see the third chart).
 
Bottom line, we doubt that the looming tax ring-fence for rental property losses on its own will drive a sea-change in investor behaviour.
 
 
 

 

 
Multiple property owners with a mortgage accounted for 25% of property purchases in April, continuing their gradual return from a lull in late 2017 and early 2018. Given timing issues, this cannot have been a bounce-back from capital gains tax-related uncertainty; rather a sign that investors still have faith in the prospects for the property market. First home buyers are also holding their ground in terms of market share, especially in the main centres.
 
CoreLogic Senior Property Economist Kelvin Davidson writes:
 
CoreLogic’s Buyer Classification figures for April showed a strong return to the market by mortgaged multiple property owners (MPOs) – in other words, investors - with first home buyers (FHBs) also managing to hold their ground last month.
 
As the first chart shows, mortgaged investors/MPOs increased their share of property purchases nationally from 24% in Q1 as a whole to 25% in April, a level that hasn’t been seen since late 2016 (when investors’ market share was already in decline in the wake of LVR III’s 40% deposit requirement). As an example, Christchurch saw a particularly strong jump in mortgaged investor activity in April (see the second chart).
 
NZ % share of purchases (Source: CoreLogic)
 
Of course, we shouldn’t get carried away by a single month of results on its own. However, it’s still worth paying attention to, and suggests that many investors remain confident about the returns they can generate from property, even despite extra costs such as higher insulation standards and the tax ring-fence for losses. Note that April’s figure is not a response to the scrapping of capital gains tax (CGT) either – CGT was abandoned on 17th April, and given the time it takes to settle a property purchase, these figures can’t have been affected to any great degree.
 
Christchurch % share of purchase (Source: CoreLogic)
 
FHBs held their ground too, as they continue to tap KiwiSaver for at least part of their deposit and/or compromise on the property itself (either location or type), hence allowing access to cheaper segments. The Welcome Home Loan scheme will also be successfully assisting some FHBs - about 8% in 2018 - into the market (and it actually also seems to be the template for Australia’s proposed First Home Loan Deposit Scheme). Indeed, although the upwards trend in FHBs’ market share has flattened off, at 23% of purchases in April it’s still a high figure by past standards.
 
Auckland % share of purchases (Source: CoreLogic)
 
 
It’s also interesting that FHBs still have a strong presence in the main centres (e.g. see Auckland in the third chart), even though property generally costs more than in regional markets. Our take on this is the same as what BNZ Chief Economist, Tony Alexander pointed out in his coverage of our figures in his weekly article on May 2nd - along with more amenities and activities, the big pull for the main centres is better job opportunities (especially in sectors such as banking, law, financial services).
 
Hamilton % share of purchases (Source: CoreLogic)
 
Speaking of Auckland, we often hear the complaint that local house prices have been pushed up by an influx of equity-rich buyers from our biggest city. This is undoubtedly a factor at certain times and in certain towns/suburbs, and Hamilton is currently one to watch. The fourth chart is a variation of the figures – splitting investors not by cash/mortgage, but by local/Auckland – and it shows that from a trough of 6% in mid-2018, Auckland investors have raised their share of property purchases across Hamilton back up to 10%. It’s well below the figure of 17% in 2015, when investors in Auckland had their own specific LVR rule and were looking further afield, but the upwards trend is one we’ll be keeping an eye on.
 
 
 
 
 
 
 

 

 

 
When a property market moves sideways (or slightly falls) I’m often asked to review the more granular meaning behind its performance. 
 
 
Top performing Auckland suburbs
Year to 31 March 2019
 
 
Worst performing Auckland suburbs
Year to 31 March 2019
 
 
CoreLogic Head of Research Nick Goodall writes:
 
Recent analysis on the performance of markets across the diverse value ranges revealed that the differences were more about geography rather than value. In this week’s CoreLogic Property Pulse we’ve taken a look at the data at a suburb level to deliver the whole story on what’s really going on..
 
Firstly, we must acknowledge that some results vary from other recently released market analysis. Particularly, REINZ data stating 30% growth or falls in some suburbs of Auckland.  (It’s important to note that the data used  was based on median sales price and only represented what happened to sell over two separate periods). Today, I’m focusing on the actual change in value of all properties in each suburb.
 
Why is that important? A quick comparison of a real life example in Takapuna shows it quite clearly. There are a total of 2,905 residential properties in Takapuna. The median value of these 2,905 properties was $1,781,450 at the end of March 2018.
 
In the 6 months to the end of March 2018 there were 83 residential sales in Takapuna where an agent was involved. This represents 2.9% of all properties. The median sales price of these 83 properties was $1,000,000. Clearly, these 83 properties don’t represent the whole suburb – there were a lot more lower-value (for Takapuna) property sales over that 6 month period than higher-value.
 
Fast forward a year (to the end of March 2019) and the median value of all those 2,905 properties is now $1,713,400 – a drop of 3.8%. This is relatively indicative of a weakening market, as is the case across the city with fewer buyers and more properties for sale.
 
However, the median sales price for the 6 months to the end of March 2019 was $1,300,000; a whopping 30% increase. This is from just 67 residential property sales (by agents), or 2.3% of all properties. So while there are fewer sales overall, a greater share of them are in higher value bands this year than last. Why? It could be anything – from certain agents or agencies dominating one year to the next, to buyers’ confidence shifting in a changing market. We don’t really know.
 
One thing is for sure, the change in a median sales price tells you nothing about the performance of the overall property market in that area.
 
So then, where has the best and worst growth been in Auckland over the last 12 months? The numbers aren’t as stark, but they’re still well worth analysing.
 
As values struggle in the super city, variance in suburbs emerge
 
Auckland suburb value change
Year to 31 March 2019
 
Sticking to the same time period (12 month change to the end of March 2019) we can see from the first table that Mangere wins out with 5.0% growth. Not bad at a time when values are drifting backwards by 1.5% measured across the whole city. Clearly there are still active people willing and able to buy in a flat-to-dropping market. At the moment Mangere is dominated by first home buyers with 48% of all sales in 2019 going to this group.
 
At the other end of the Auckland ‘leaderboard’ we see the North Shore dominates. In Belmont, property values have dropped 6.8% over the 12 month period analysed. This is nothing to panic about given most owners should have had equity of at least 20% when they bought, thanks to the RBNZ’s loan-to-value ratio (LVR) restrictions, but of course a noticeable drop for anyone hoping for or relying on capital growth for their investment to stack up. And investors have noticeably reduced their activity in this market.
 
Top performing suburbs nationwide
Year to 31 March 2019
 
 
Worst performing suburbs excluding Auckland
Year to 31 March 2019
 
To get a quick snapshot across the city we can visualise this on a map. Here, the weakness across most of the North Shore is plain to see and pockets of growth, though sparse, are visible in South Auckland.
 
Looking outside Auckland, we get further confirmation of the strength of the regions as a whole with suburbs in Rotorua, South Waikato, TaupÅ?, Hastings and Tararua District all experiencing growth of more than 20% over the year. The lower value of property in these places is no doubt a factor in this growth, with low interest rates keeping mortgage payments low.
 
And while Auckland dominates the list of worst performing suburbs nationwide, if we exclude Auckland suburbs we see Takapuwahia in Porirua has also seen significant value erosion (-5.4% p.a.). And while no suburbs in Christchurch are in the top 5, they fill out the top 10. So while we report a minor lift in value across the city (1.3% according to the CoreLogic house price index), similar to Auckland there are pockets of both strength and weakness (mostly out west).
 
For a list of the top and bottom 50 suburbs across the country please see attached spreadsheet and/or enquire for rankings by city.