St Heliers Property – Some Sectors Doing Better Than Others

Statistics from the Real Estate Institute of New Zealand (REINZ) show lower to mid-value properties have performed better than the upper price ranges. REINZ collects, collates and supplies real estate sales data on a monthly basis to New Zealand’s real estate industry, government departments, private industry, and the media.

87 properties have sold over the last 6 months (September – February inclusive). 64% of the properties sold for less than $899,000. Of the 87 properties, 17% sold for less than $599,000, 16% sold in the $600,000 – $699,000 band, 18% sold in the $700,000 – $799,000 range, and 13% sold from $800,000 to $899,000. The average percentage (4.5%) of properties sold in the upper price ranges were disappointing. Sales prices ranged from $315,000 to $2,800,000.

    These statistics imply:

  • properties on the market for less than $899,000 sell more quickly
  • there are more buyers in the $600,000 – $899,000 range than other price bands
  • there is less buyer competition for properties more than $900,000
  • properties that sell well (less than $899,000) do not indicate properties on the market for more than $900,000 will do equally well – even if they are on the same street
    Other truisms are:

  • properties on the market for more than $900,000 cannot stay down forever
  • properties in the upper price bands might represent very good value – for now
  • the real estate industry moves very quickly – buyers and sellers can be caught unawares as one sector moves out of favour to be replaced by another sector enjoying its time in the sun
  • the winners are the buyers and sellers who decide to take advantage of the current situation – before others catch on

Applying a trend-line to the monthly moving median over the last 6 months indicates properties in the $800,000 range have performed best with 3% growth in value. All other price ranges are trending down or sideways in value. Nevertheless, there has been a sluggish 1% growth in median prices overall.

The moving median is so called because the medians are compared with each other after being calculated in each individual month. The median is calculated by ordering the data from smallest to largest before identifying the value at the mid point between the lowest to highest sales price. The trend-line is a straight line that sits as close to as many sales prices as possible.

Breaking the data down further, the trend-line over the last 3 months indicates properties in the $600,000 range have trended up with a 2% growth in sale prices; properties in the $800,000 range has improved to 4%. Again, other price ranges are either trending downwards or remaining stable.

Anecdotally, mono-clad homes sell at a significant discount compared to other similar size properties with different construction types. Owners of beautifully presented, older style homes with 3 or more bedrooms on the market for less than $899,000 have the greatest advantage.

Buyers in the post $900,000 sector will recognise a good buy by how much the purchase price has been discounted from the capital value. In some cases the discount can equal tens of thousands of dollars. The capital value is the value attributed to properties by councils to calculate the amount of rates the property owner must pay.

Remember, current buyer and seller advantages and disadvantages can turn on a dime in a fraction of time. The trick is to identify which parts of the market currently perform well and which sectors will enjoy good future prospects. Then act while you can. Before it is too late.
Tim Golder is a Real Estate Consultant with Harcourts in St Heliers, Auckland, New Zealand.