Putting the REAL in Real Estate for 2024
Navigating the Unpredictable Tides of 2024 in Real Estate Investment
13 February 2024
The real question all investors are asking is, “What does 2024 hold for us in the world of Real Estate?” As always, the industry appears as dynamic as ever, filled with contrasting media perspectives that leave us contemplating the future. A recent exploration of New Zealand’s property market reveals a spectrum of predictions, from soaring highs to cautionary tales of downturns.
David Findlay, recently titled REINZ Manager of the Year and Owner of Harcourts’ Top Auckland Central Office, Harcourts JK Realty Group, provides a breakdown into what 2024 has in store for us, how to determine a great property investment and, most importantly, how to choose the right real estate agent for you.
Conflicting Media vs Buying & Holding
In a whirlwind of conflicting reports, the media continues to spin narratives of optimism and scepticism. One day, headlines herald the anticipated resurgence of the property market after a subdued 2023; the next day, they forecast interest rate hikes and echo tales of house prices tumbling in late 2023 and early 2024. It’s a narrative alternating between the exceptional highs of new housing developments in Auckland to the apparent lows of a declining development market – which we at Harcourts JK Realty Group, Harcourts’ top office for Central Auckland, are yet to witness.
However, in real estate one constant remains: buying and holding property will stand you well in the future. History has consistently shown that those who embrace a long-term perspective on real estate investment often emerge as winners. Reflecting on a couple of decades, it's rare to find someone regretting a property purchase made years ago.
New Zealand’s reliance on the residential investment market stands firm. While share markets and business investments demand intricate skills and knowledge, the residential sector remains a solid choice for many looking to build their wealth portfolio. In the face of uncertainty, the age-old strategy of buying and holding stands as a beacon of stability.
A Guestimate for 2024: Positive Signs and a Balanced Outlook
There are some genuinely positive precursors to the market that experts have been holding out for, offering glimpses of a more stable real estate market. Experts point to promising indicators such as favourable downward inflation trends, discussions around a steady Official Cash Rate (OCR), and interest rates. With the new government, the changes in the bright-line test and interest deductibility have sparked optimism amongst investors, and to add to all of this we have a pent-up market of eager buyers ready to transact with the industry after years of uncertainty.
Anticipations lean towards a more controlled, normalised increase in house prices, steering away from the frenetic Covid boom. This shift instills confidence in those entering or expanding their presence in the real estate market. Examining the “bottom of the market” in May/June 2023, Auckland leads the charge with a decent +4.3 per cent rise in house price valuation since then, with the rest of the country following suit at approximately +3.5 per cent.
While these numbers showcase positivity, it’s always important to consider the interest rate costs and inflation against them when analysing the market to grasp the full picture.
Our outlook for 2024 is cautiously positive, underlined by promising signs, yet tempered with a balanced perspective that foresees a steady trajectory compared to the roller-coaster of the past.
On the Ground Insights: Evidence Shaping 2024
A Market of Pent-up Buyers Ready to Transact
Drawing from our Harcourts JK Realty Group’s team’s extensive engagement with over 200 sellers and 3,000 buyers in Auckland just these last six weeks of 2024 alone, the prevailing sentiment echoes a journey of normalised growth for 2024, accompanied by a gentle decline in interest rates over time. The banking sector’s inclination to lend more has instilled confidence, encouraging individuals to fast seek mortgage approvals with a newfound assurance.
Immigration Influx Increasing Rental Demand & Pricing
Immigration emerges as a pivotal factor, with our diverse and appealing country attracting those seeking stability in uncertain times. The influx of immigrants contributes to property purchases and an uptick in rental demand, consequently enhancing yields for investors. While optimism is on the rise, there’s a collective hesitancy to prematurely celebrate success.
Auctions on the Rise, increasing Competition
Sales numbers have steadily climbed, prices are trending positively, and the pricing alignment between buyers and vendors has improved versus last year. Auctions are drawing in reasonable crowds, although property clearance rates slightly trail expectations. Enquiry numbers, however, paint a more positive picture compared to the previous year.
Lull in Banking Mortgage Approvals
Buyer feedback suggests a waiting game for final bank approvals, and the initial lull in 2024 is attributed to the extended holidays following the much-needed Christmas break.
As we navigate the ever-evolving dynamics of 2024, the above insights offer a glimpse into what we can expect to see unfold for New Zealand’s Real Estate market this 2024.
What Determines a Great Property Investment?
A Unique Approach for You: The Various Factors Toward Success
Navigating the realm of property investments is a complex undertaking, and there are several factors to consider, each with a unique responsibility in shaping the success of the investment. More than this, it is an individualised approach and differs from person to person based on the role the specific investment plays in their full financial portfolio.
From rental yield and capital gains to location, size, and ease of maintenance, the elements contributing to investment success vary greatly.
Higher Weekly Yields from New Builds
For those dipping their toes into the investment arena, the new build market is attractive, generally offering higher yields, lower maintenance demands, and the added security of warranties — a reassuring foundation for budding investors.
Greater Long-Term Value with Land Purchases
Conversely, for those willing to trade immediate weekly income for longer-term gains, land becomes a focal point. Acquiring a substantial section (600m2-plus) in a major city presents the prospect of superior capital returns, albeit at the expense of reduced rental yields.
Empower Yourself – Seek the Guidance of Experts
Ultimately, seeking guidance from licensed financial advisors and experienced real estate agents is key. Engaging in financial comparisons with experts further refines your perspective, aiding you in making informed decisions tailored to your unique circumstances.
And How do You Choose the ‘Right’ Agent?
In the world of real estate, the right agent can make a profound difference on your financial position. Take the time to choose the agent who genuinely works in your best interest and possesses the skills to engage potential buyers effectively.
Unlocking the Secret: It’s the Active, Emotional Buyer that Counts, NOT the Brand
In the world of real estate, agents often share the same tools – photographers, advertising platforms, copywriters, and staging services. Regardless of the agency or brand, the costs and strategies are remarkably similar. The agent that will get you the successful sale you’re after, with a favourable price, is the experienced agent that can clearly distinguish your needs, that has impeccable knowledge of what’s going on in the market and, most importantly, who knows how to attract active, emotional buyers and create solid competition amongst them to ultimately achieve your winning sales price.
Here’s a little secret: the best buyer for your property is always an active, emotional buyer, not just someone seeking a bargain. While databases are commonly flaunted, they may not always yield the top value for sellers. Active buyers tend to choose a house they fall in love with, or the investment property they are searching for that will play the pivotal role in their property portfolio, irrespective of the agent’s brand, and are often prepared to fight for it.
What Matters in Choosing an Agent: Proactive over Reactive
So, what truly distinguishes one agent from another, and what questions should you be asking? As REINZ Manager of the Year, I advocate for a proactive rather than reactive approach in real estate. If your agent’s primary strategy is responding to Trade Me enquiries and running open homes, a red flag should be raised. Your agent should actively be seeking buyers beyond standard, reactive marketing, monitoring the buyers’ journeys and reaching as many catch points as possible – all while regularly keeping you updated.
Digital Presence Matters
In the digital age, controlling your property’s perception online is crucial, on valuation and marketing websites as well as via social media. Social media has emerged as a powerful tool, with a notable increase in enquiries overtaking other digital platforms for listings’ leads, particularly for renowned agents. Your agent should ensure your property stands out and actively engages with potential buyers from similar sold properties as this can significantly impact your property’s visibility and appeal to the wider market.
Agent Demeanour: Entrust Enthusiasm
Positive, energetic, and pragmatic – these are the traits you want in your agent. Ensure they diligently outline their disclosure duties while emphasising the positives of your property. During discussions of comparative sales, take note of their excitement. If they aren’t excited to sell your property, consider whether you should be enthusiastic about entrusting them with the sale.
Negotiation and Commission
Choosing the wrong agent can result in significant financial repercussions, not just in commission but in lost sales value. While commission negotiations are common, an agent who is too willing to lower their fees and offer discounted marketing might raise concerns about their negotiation and overall marketing skills when it comes to securing top dollar for your property. A great agent is worth their fee – engaging, knowledgeable, skilled in negotiation, well-versed in property laws, and adept at presenting your property in its best light.
Mystery Shopping Approach - Don’t Rush Your Decision
Meet more than one agent, assessing who truly aligns with your values and goals. I believe the agent’s qualities outweigh brand influence. “Mystery shop” potential agents by attending their open homes, observing their representation, buyer engagement, and follow-up. Imagine the house is yours and assess whether you, as the vendor, would be content with their approach and presentation of your property, your greatest financial asset.
Planning to Succeed: Your Real Estate Goals
I’m passionate about the industry, so if you are interested in further discussions on the New Zealand real estate market or would like to discuss your specific situation and goals, please don’t hesitate to drop me a line at firstname.lastname@example.org or give me a call on 020 444 5550. Visit jkrealty.harcourts.co.nz to learn more.
DAVID FINDLAY BIO:
David owns Harcourts’ top Auckland Central office, JK Realty Group, and recently won REINZ’s Top Manager of the Year. With 20 years’ experience, he is also the MD of Development Projects. His passion: propelling growth in his clients’ real estate portfolios.
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