So, how is the market?

February was a very buoyant month with the median price across New Zealand increasing by 14.3% to a new record median price of $640,000 - that's up from $560,000 in February 2019 making this the largest percentage increase in 53 months.

The Auckland market saw the biggest annual increase in sales volumes in 88 months with a 41.6% increase in the number of properties sold when compared to the same time last year. All seven districts in Auckland saw double-digit annual increases in sales volumes, the largest of which was Papakura District with an 83.6% annual increase. North Shore City saw a record median price of $1,155,000 and Waitakere City had a record equal median price of $830,000 and Manukau was up 2.2% to $850,000.

The median house prices in Auckland increased by 4.3% to $888,000 – up from $851,000 at the same time last year – the highest price in 35 months and the number of properties sold in February increased by 41.6% year-on-year – the highest number of residential properties sold in the month of February in 5 years.

Regions outside Auckland with the highest percentage increase in annual sales volumes during January were:
• Gisborne – the strongest February in 15 years
• Tasman – the highest for the month of February in 3 years
• Hawke’s Bay – the highest for the month of February in 4 years
• Bay of Plenty – the highest for the month of February in 4 years

Manukau’s statistics

Manukau's average sale price sits at $850,000 which is an increase of 2.2% compared to the same time last year. There were 379 sales in February 2020 compared to February 2019, there were 246 sales - that's an impressive increase of sales volume of 54.1%.

Market highlights

Auckland saw the median number of days to sell a property fall by 17 days from 56 to 39 year-on-year – the lowest days to sell for the month of February in 4 years.

Auckland had the second highest percentage of auctions in the country with 32.4% (637 properties) sold under the hammer, up from 21.4% (298 properties) in February 2019 – the highest percentage of auctions for Auckland in 27 months.

In summary

These statistics highlight that stock levels remain restrained, buyer interest remains strong, fueled by favourable market conditions such as low interest rates.

For two months in a row, every region in the country experienced annual median price increases, showing strong demand across the country. It’s highly likely we’ll see these price rises continue in March unless the economy takes a sudden hit from COVID-19. Whilst there is a strong awareness of the COVID-19, as yet we have seen little impact on the housing market.

Owning property is an excellent way to build wealth. Historically, property has been a less volatile investment with real estate values invariably tracking upwards over time. What’s more, you have the added benefit of being able to “leverage” your existing real estate investment to buy an investment property using borrowed money and grow your property portfolio even further.

Using equity to grow your investment portfolio

How much equity do you have in your home or investment property? Enough to fund your next property purchase and grow your investment portfolio?

If you’ve owned your property for some time and provided you have the means to service a mortgage, you may be able to access the equity in your property to fund the purchase of your next property. Equity is the difference between your property’s value and the amount you still owe on your mortgage. It’s essentially the bit you “own” of the property and it can be used as a deposit to buy another property.

If you’re buying a residential investment property or you’re using a residential investment property you already own as security for a new loan, you’ll generally need at least a 30 per cent deposit. Instead of having to save up the cash for the deposit though, you could use the equity in your existing property to purchase another property.

Calculating the equity in your property

To calculate how much equity you have, you’ll need to know the market value of your property. You can use the valuation on QV or get a registered valuation of the property to determine its market value. You’ll also need to know how much you still owe on any lending secured by the property, which you can obtain from your lender.

Lenders will determine how much you are able to borrow by looking at a combination of your equity and income. Different lenders will have different lending policies and the combination of equity and income may vary from lender to lender.

Your potential rental income from the investment property you’re planning to buy will be included in the lender’s servicing calculations when determining your borrowing capacity. Contact a Harcourts’ Property Manager to arrange a rental appraisal to help you determine the likely rental income from the property.

You’re required to have at least 20 per cent of equity in your existing property after new lending is taken out if you’re using the equity in your family home, or 30 per cent equity if using your existing investment property. That means you could borrow up to 80 per cent of the value of your family home and 70 per cent on any investment properties you own, based on current loan to value restrictions.

So, how is the market?

It's been a terrific start to 2020 and a strong finish for 2019.

There's an insufficient number of homes on the market to satisfy the large number of actives currently. We are finding that buyers are being more decisive when it comes to purchasing and moving quickly on homes in areas with high demand. You can see this is the case with the decrease of the median number of days a home is taking to sell in Manukau.

Manukau’s statistics

December saw a significant upsurge in activity both in the Manukau market and across the country. When comparing against the same time the previous year.

The median sale price for Manukau sits at $900,000 for December 2019. If we compare that figure to December 2018 which was $832,000, that's a rise of 7.8%. The number of homes sold in Manukau in December 2019 were 314 compared to December 2018 which was 295 - a rise of 6.4%.

Market highlights

The highest number of residential properties sold in three years nationally has been recorded for the month of December. The property market had a solid end to the year with a 12.3% increase in the number of properties sold in December 2019 compared to December 2018.

In Auckland, the number of properties sold in December increased by 31.7% year-on-year – the highest number of properties sold in the month of December since December 2015.

Sales in Auckland were the highest for the month of December in four years with an increase of 3.5% to $890,000 – up from $860,000 at the same time last year. Auckland saw the median number of days to sell a property fall from 39 to 34 year-on-year – the lowest days to sell in 2 years.

In summary

The high sales volumes have reduced available listings and with multiple active buying segments, this is resulting in a strong demand for quality properties.
Favourable factors are geared for an active 2020 market with prices likely to increase again, combined with low interest rates fuelling the confidence in the market.