So how is the market?

If you were to ask me how the market is now, I would say not bad. I might even say pretty good. It continues to be a good time to buy, prices are the lowest they'll probably go, and (thanks to the RBNZ lowering the OCR to 1%) interest rates remain low and look set to stay there for quite some time.

With that said, it’s not a bad time to sell either for most properties — assuming you’ve adjusted your pricing expectations to the new norm in Manukau and Auckland overall. Will the low interest rates see an upturn in the market? It is unlikely in the immediate term, however it has already increased confidence and activity in the market. With further relaxing of the LVR rules expected (and perhaps some relaxing of the banks’ lending criteria), predictions point to an upturn maybe late 2020, but more likely 2021–22.

Market highlights

The monthly property report from REINZ shows for the first time in eight months, the number of residential properties sold across NZ in July increased by 3.7% from the same time last year to 6,118. This number is also the highest for the month of July in 3 years.

This suggests we’re starting to see some early signs of growth. We can attribute this to more certainty post the removal of the Capital Gains Tax bill, renewed confidence as parts of the market adopt the new norm in terms of pricing, and the warmer weather we’re looking forward to (which is when we tend to see more activity in the market).

Manukau’s statistics

We are seeing many positive signs for the road ahead. Manukau’s median sale price for July 2019 was $820,000 and when we compare this to July 2018 this figure was $828,000. Auckland's average asking price lifted by 1.5% compared to June 2019 to $928,152 for the second month in a row — that’s still some way off the region’s 2019 peak average asking price of $960,715 in February. I'll be watching with interest to see what happens during the rest of this quarter.

In summary

Across Auckland, prices haven’t really fallen that much; volume yes, but prices have been pretty static for quite some time. We can expect a nice stable market for the foreseeable future.

Manukau Market Wrap

Nationally, the stock availability continues to decline as expected in Winter. The volume of sales in June was not surprising and fell in June by -3.8% from the same time last year to 5,978 according to the latest data from the Real Estate Institute of New Zealand. In Auckland, the number of properties sold in June fell by -3.2% year-on-year .

There's less competition

With the lowest number of new listings for the month of June since listings records began, Auckland saw the lowest number of properties sold for two months continuing the trend we’ve seen for a few months now. Sale prices seem to have stabilised and all in all, with the lack of new listings, open homes and buyer activity is actually pretty good. The pool of buyers is still the same, there is just less to look at.

Manukau's median sale price compared to Auckland's

The median sale price for Manukau is $680,000 last month and take a 12 month average, this figure sits at $675,000 - down 2% last month however if we look at a 5 year average, this median increased to 8%. Across the country prices are still climbing, but the rate has slowed. The median sale price in Auckland remains steady with an 0.1% increase last month and over a 5 year average, has risen 7.2%.

Manukau's median days on market compared to Auckland's 

For Manukau, this number is 45 days and take a 12 month average, this drops to 39 days. The median number of days to sell a property in Auckland increased in June by 5 days from 40 to 45 - compared to the same time last year.

In summary

When do we expect to see the market come back? That’s a prediction well out of my pay grade but all the underlying factors are still in play, housing shortage, low interest rates, immigration etc. And to be fair - we are 3 years into the flattening, here in Auckland anyway. Volume started dropping in 2015, prices started to, or arguably did plateau in 2016, we’ve had a wee fall and they appear to have plateaued again now in 2019. They say on average a 4 year turnaround.Residential property sales activity looks set to tick along at the same controlled pace in the second half of the year as it has in the first, with average values growing in a restrained fashion. Other key factors to watch over the rest of 2019 include policy decisions from the Reserve Bank (e.g. LVR and bank capital rules), the landscape for investors’ returns, the potential flattening off of residential building consents, and how buildings insurance premiums might change due to risk based pricing.

The bright line tax property rule says you’ll pay tax when you buy and sell a residential property unless the home you are selling, is your main home.

It's important to note that for need to have used a property as your main home for 50% or more of the time that you’ve owned it and used 50% of the area of the property as your main home. For example, if you use 40% of a property as your home and 60% as a rental property, you can’t use the main home exception.

Another important note to make is that you can't use the main home exception more than twice over any two-year period.

This includes if the property is located overseas.

If the home is held in a trust, the main home exception can still apply if the house sold was the main home of the principal settlor of the trust (the person who has made the biggest financial contribution to the trust), or the principal settlor didn’t have a main home, and it was the main home of a beneficiary of the trust.he bright-line rule does not apply if you sell a property you inherited.

The bright line tax rule does not apply if you inherit a home

So, if the residential home you're selling is not your main home and you bought it from the 1 October 2015 to 28 March 2018, inclusive: the two year bright-line rule applies.
If you bought the property on or after 29 March 2018: the five year bright-line rule applies.

But whenever you buy a property intending to resell it, you’ll need to pay tax on any profit you make when you sell that property.

Before you pay the income tax you owe on your property sale, you’ll need to complete an income tax return. You’ll generally include the amount of property income you’ve earned in the “other income” box on your return.

You’ll also complete an IR833 Property Sale Information form and submit this along with your income tax return.