Buyers calling for more luxury homes to come to the market
With Kiwis feeling richer, as their homes gain in value and the economy rebounds, wealthy Kiwis are looking to upgrade.8 June 2021
2 Market Road, Remuera
As the New Zealand economy emerges from the Covid-19 pandemic well, overseas travel remains uncertain, and the importance of the home has come into sharp focus, affluent Kiwis are looking to upgrade to something that’s more substantial and higher quality.
In some cases, they’re trading up from $3 million or $4 million homes to $5 million to $10 million properties. Another group of Kiwis and expats overseas, are looking in the $10 million to $20 million range in smaller numbers.
This all means, if you’re the owner of a high end home thinking of selling, you have a larger pool of buyers than normal waiting to buy.
UP Real Estate director Barry Thom explains what’s driving the strong interest in the Auckland luxury property market at the moment.
After moves by the Government to make investment property less attractive in a bid to restrain the rising property market, Kiwis who thought they might invest in additional property, are now putting that money back into the family home.
“The family home isn’t subject to the bright-line test so in a way it’s become a tax haven,” says Barry.
Meanwhile, values have gone up substantially in the luxury home market so people are feeling wealthier. Attractive homes that were worth $3 million two or three years ago, are now worth $5 million in his Auckland market, he says.
At the same time, though immigration has tightened due to Covid-19, expats are coming back and they’re looking to spend, says the UP director, “They know what a good home looks like and they know where they want it to be,” he says. And this trend will carry on in the coming years, he predicts.
As a result of all this, buyer demand is out there for $5 million to $15 million homes, he says. And for those looking to downsize from a substantial home, or just to free up some capital, this is a good market to be selling in.
Listings in the new high levels are “steady as she goes,” says the UP director. The firm has some good listings coming on and he notes that a number of homes at the upper end will sell under the radar for privacy reasons.
Growing Kiwi net wealth
The net wealth shift among Kiwis over the last five years has been phenomenal, says Johnny Sinclair, national director of residential sales at Bayleys, who says his firm’s seeing huge demand for $5 million to $10 million homes.
Who are these wealthy buyers? They’ve done well with start up businesses that they have sold for lofty sums.”They might have sold their businesses for $30 million or $50 million but they still want to call New Zealand home,” says Johnny.
Others have made money through property transactions, or they’ve worked in big jobs overseas.
29 Minnehaha Avenue, Takapuna, Auckland
“There’s a generation of those in the 40 to 50 age bracket who have done big OEs, have young families and want to come back home,” he says.
Some of this group would look at properties of over $7 million but these are few and far between. With this sudden rise in wealth, homes haven’t necessarily followed suit, says Johnny.
A $7 million home will typically have five bedrooms, a big rumpus and entertainment area, a four car garage, a pool and pool house, and a tennis court, he says.
What you should know as a seller
If you’re thinking of selling your high quality home, one of the things to know about these buyers is they don’t necessarily have to sell before they buy. “Finding the finance is not the issue for them. These guys don’t think twice about finding the right home to upgrade to,” says the Bayleys director.
And while those with less luxurious homes may not want to sell in winter because the house won’t show at its best, with these $5 million to $15 million homes, it’s not a concern.
“When you’ve got a $5 million plus home, it’s generally facing north and has sun, so its presentation shouldn’t be affected. As long as it still presents well, there’s no reason for not selling in winter,” says the Bayleys director.
When he talks to potential vendors, he’ll say: “Why go in a buoyant market with like-minded houses, you’re much better off going when there’s limited stock. There are buyers out there, there's low interest rates and money is available,” he says.
And if you don’t get the right price, don’t sell, he adds.
Don’t doubt that the buyers are there
Out in Auckland’s top real estate markets, agents are reporting strong competition among high-earning buyers in the luxury market.
Barfoot & Thompson agent Ashley Tait, who sells high end homes in the Herne Bay market says the interest has been very strong on a Jervois Road home in the $5 million to $8 million market.
Priced at $5,695,000, this six bedroom, four bathroom home with a pool and city views, would normally attract a relatively small amount of buyers, but this time round the interest has been very strong, he says.
Buyers were typically people who were selling their own homes for $3 million to $4 million and wanting to upgrade to dream homes in the $5 million to $6 million range upwards.
Ray White Remuera’s Steve Koerber, currently marketing a $6.38 million home, is also seeing unprecedented interest in his luxury home market.
2 Pere Street, Remuera, Auckland
For those wanting to upgrade, they’re frustrated because they can’t find much in their price range of $4 million to $6 million plus, he says.
“A guy rang me the other day whose house is in a prime suburb street worth about $4 million and he wants to trade up to a $6 million home. They have a rental as well as their home and their intention is to sell both and buy a big family home,” says Steve.
People will only sell if they find something they like because they love their properties, he adds.
Bayleys Ponsonby agent Blair Haddow, says he’s seeing luxury home owners spending a lot of money on their houses at the moment.
“They’re working to make them even more beautiful,” he says. Tradespeople are very busy, people are building pools, and investing in high end furniture, from the likes of ECC and Studio Italia.
Blair is dealing with buyers looking for homes in the $3.5 million market or above. Then with others in the $10 million to $20 million price range. “I get calls from expats and there’s nothing coming up,” says Blair.
The Bayleys agent has a few homes in the luxury market coming on in the near future, one home a bit under $4 million, another over $5 million but he says it’s generally a bit quieter than this time last year.
When something special comes up, the interest is definitely there. The Bayleys agent recently sold a holiday house in beautiful Taupo Bay, four hours north of Auckland.
“I had a Kiwi on the phone from the Cayman Islands, another one in Colorado, another one in New York, and a guy in the room. It opened at $2.1 million and the Kiwi in Colorado bought it for $2.9 million.”
Paul Sissons, an agent with NZ Sotheby’s International Realty, says he has clients looking for $5 million homes and there isn’t much to show them, then he’s also getting calls from people wanting to spend from $7.5 million to $12 million.
“People are looking at their homes and thinking, ‘Where can we have a better Covid lockdown?” says Paul.
Those who own homes in the $3 million to $5 million range, see their own homes have increased in value and feel in a position to go and look for something more, he adds.
Most people are happy to trade up in the locality they’re already in, he says, especially if they have children in schools. The bulk of them want to stay within a 5 km radius of their current home, then they know where the shops and amenities are, says the NZ Sotheby’s agent.
Wellington luxury market, locals happy to put their hands in their pocket
Auckland’s not the only market where Kiwis are looking to upgrade in the country. NZ Sotheby’s Wellington agent, Ben Hawan, says the level of interest in the higher end Wellington properties he deals with, has doubled in the last 12 to 18 months.
“The amount of buyers in this space has taken a huge bump up,” he says.
Ben, who’s sold three properties recently that have broken records in their markets, says buyers are very competitive.
“In the price point above $2 million, we’re regularly seeing unconditional offers. We’re making sure the building reports and LIM reports are supplied and buyers are using the tender process to get themselves into a position where they can bid unconditionally.
“We’re seeing bridging finance being used, and there's a confidence in their ability to sell their current homes,” he says.
Some of his buyers are selling a rental or two and the family home to move up to something nice. “There are a lot of people who are over the rental game,” says Ben, who’s also sold to recently returned expats.
What does a luxury property look like in Wellington? You’ll often find a lot of little things, details will create that feeling of luxury. Privacy is important, Wellingtonians like to keep a low profile, says Ben.
The last three luxury homes he’s sold have had big swimming pools which might boggle the mind for some Wellingtonians. Buyers also like quick access to the city and some of those iconic picture postcard views.
113 Hamilton Road, Hataitai, Wellington
Some high end lifestyle properties, within half an hour of the city are also attracting interest. Expats returning from the US and UK, doing well on the exchange rate, still see prices as reasonable in the capital.
In Wellington, the top end used to be in the $2 millions, now it’s more like $3 million, according to Tommy’s Real Estate’s senior agent, Nicki Cruickshank.
For this kind of money, people are expecting the perfect family home, she says. “It’s larger, with views, four or five bedrooms, two living rooms, a double garage, and a good high quality finish so you don’t have to do anything, '' she says.
The agent is fielding high demand in the upper price range, from locals and expats.
A well presented home in Hataitai at the moment is likely to get 10 to 15 offers and that will mainly be from local buyers, she says.
Homes in the $3 million plus range don’t come up very often, once every three or four months. With some of these properties, people hear about them and approach the owners privately, says the Tommy’s agent.