HALF YEAR REPORT 2018

We have frequent queries about the Kerikeri district real estate market and it's possible patterns or current features. There has been a steady first half to 2018 with sales volumes returning to average levels prior to the peak levels from late 2015 through 2016. There have been 171 sales in the Kerikeri and surrounding areas so far, in 2018, compared with 195 in the same period of 2017. This represents a drop in volume of 13% compared to last year and 30% from peak levels in 2016. Most of the lower volume is due to slower section sales and residential house sales as a result of lower inventory levels. The lifestyle homes sectors (over 1 ha) have helped to make up most of the difference. This information does not include the number of homes sold privately in Kerikeri’s retirement villages and country clubs, which have been expanding rapidly over recent years.

Residential section sales volumes in 2018 are down by two-thirds at just 8, compared to 22 during this period last year. Bare lifestyle block sales are tracking at similar levels to last year. Purchasers considering building are having difficulty finding suitable sections and unless there is an increase in land development in Kerikeri we expect this to continue. Interestingly, bare land median prices are still below levels at the prior peak of 2008 and below national medians where historically they have been above that level. This could be an indication that there is still more room for land prices to move up.

The over-$1 million housing bracket continues to be strong, nearly doubling the 2017 first-half volume with the best half on record for over a decade. There have been 22 sales in the first half of this year compared with 10 in the first half of 2017. The number of $1million-plus buyers in the Kerikeri market is greater than this when you consider the number of $million house and land packages being built across Kerikeri. There is still a strong appetite from buyers for above average quality, newer built homes and many of the retiring age buyers are happy to pay a premium to get what they want.

The middle of the market ($500 - $800,000) has been slightly cooler than the same period last year with an increase in stock levels meaning vendors are competing with more properties to attract buyers. Properties priced ahead of the market are taking longer to sell and some vendors are reducing their asking prices to get more interest.

The lower end of the housing market (under $500,000) has been slower due to limited stock and also fewer first-time home buyers or investors who typically seek this category of home, with just 22 sales compared with 40 by the end of June last year. Prices for first home buyers put most properties out of reach in Kerikeri and some investors are unsettled by new regulations such as an extension to 5 years of the Brightline test, ring-fencing losses on investment properties and higher deposits required.

The median price for homes in 2018 for the Kerikeri area appears to have reached a peak on an annualized basis and has flattened out at around $695,000. The median price for homes is well above the Northland and national median price, closing the gap with Auckland as prices there level out. Historically, prices in Kerikeri have corrected back towards the national medians levels when they have gone this far ahead and sales volumes were declining. The key difference at this time is that inventory levels are low in certain sectors, especially of bare land and building costs are not getting any cheaper, which could help to insulate against the steep declines in the last cycle. Additionally there is still a steady stream of retiring New Zealanders moving north and enough building work ahead to keep the younger sector in the trades from moving elsewhere for work. If there are any price corrections on the horizon our view is that they are more likely to affect the middle and lower end of the market where the greatest resistance to current price levels appears to be.

Inventory levels nationally and in Kerikeri are below levels in recent times, reducing the choice available for buyers. On the other hand it is an opportune time for sellers to take advantage of the limited amount of competition on the market and achieve above-average prices for their homes.

We look forward to the usual seasonal pick-up in listings as Spring approaches and with a continued interest from buyers, both locally and around the country, our outlook remains very positive for the property market in Kerikeri for the remainder of 2018.
As always, we are happy to discuss our reports with buyers and sellers and to meet on an organised or ad-hoc basis with you.