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Chapter 1: What insights do mortgage advisors share about the summer property market?
I think if you asked the three of us, is it a good time to be buying? I think we'd all probably say yes.
Kia ora and welcome to a special guest edition of the New Zealand Property Market Podcast brought to you by Cotality.
I'm Nick Goodall, Head of Research for Cotality and today we're going to set the holiday scene by speaking to a couple of loan market mortgage advisors from around the country about their local markets where many Kiwi will be holidaying over the summer and may consider buying a property in these idyllic locations. So let's get into it and meet our advisors.
We've got three to talk to today from Mangowai representing the unbeatable north. We've got Mark Lahini. Kia ora Mark, how you going mate?
Kia ora Nick, thanks for having us on and looking forward to talking about the beautiful Northland.
Yeah mate, love to hear it, love to hear it. Thanks for coming on. Next from Tauranga, representing the beautiful Bay of Plenty, we've got Dan Breed. Dan, how are you mate? Have you made it to the cricket at all this week or planning to get down this weekend?
Sunday I think is going to be the day. I think that's the day we're going to wipe the West Indies down. Yeah, we're good in the bay, doing really well. It's going to be hard to fight Mark because I'm from Kaitaia originally, so the mighty north is pretty powerful.
Oh, north represent all around. I love to hear it. Love to hear it. Not that I'm going to be biased at all in this, guys, I promise, I promise. And coming to us from Queenstown, representing that picture postcode south, we've got Stuart Mitchell. Stuart, how are things in the adventure capital of the world?
Well, today's not beautiful. It's absolutely peeing it down, which we've had that for probably the last couple of months, to be fair. But apart from that, everything's great and looking forward to competing against these two other areas to see which one comes out on top. I've not actually heard of them both, these areas, until today. So it's going to be a bit of a surprise for me.
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Chapter 2: How do local markets in Mangawhai, Tauranga, and Queenstown compare?
What's the big appeal there?
I mean, what's not appealing, to be fair. You've got a massive beautiful sunny beach. You've got Rotorua, one of the best mountain bike parks, all of 40 minutes drive away. It's free. You've got plenty of shoreline. You've got fishing. You've got diving. You've got a great sea view, great food. It's pretty hard to beat, really.
I'm recording this from my caravan at the front of my house, nice and peaceful, just at the mountain. Yeah, look, it's a great spot. It has changed a lot in the last 10 years to be, you know, a big city and a proper city. So, yeah, there's a lot going on for this area, especially growth-wise as the wider regions kind of expand as well.
So, yeah, lots of change and lots of movements kind of happening around this area, which is great.
Yeah, no, good call, mate. So, Stuart, what attracted you and has now kept you in Queenstown?
Yeah, well... The big thing for me for Queenstown is that, and you do remind yourself when you're coming in on that plane, you are in the middle of the mountains. There's no free ride here. So we've probably got more per capita self-employed people than anywhere else in New Zealand. So everybody's self-motivated, driven.
People in this town like people that have got a bit of get up and go about them. There's a real community feel that anything you want to do with sport or whatever, the local businesses will try and fund you and support you because we don't get a lot of help. So it's all from internal.
So everybody here, you imagine in most places you've got two, three, fourth generation miserable people stuck where they are because that's where the family brought them up and they haven't got the support. the wherewithal to relocate or travel somewhere else and settle. Queenstown doesn't have that problem because again, it's probably too expensive to be stuck here. You'll move somewhere else.
So everybody here, everybody that is here wants to be here. And then you imagine 3 million people a year coming here on holiday on top of that. So the atmosphere, the energy, the environment, the will-do, can-do, want-to-do attitude is what sold me. Then on top of that, You've got the scenery and everything else, the outdoor activities that go with it.
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Chapter 3: What factors are influencing property trends in Queenstown?
And we're just over an hour outside of Auckland, the biggest city in New Zealand, and access to an international airport. So it has really good Northland feel, but you still have access to all that big city stuff, and you can just see all that growth coming in. It's a real growth town, so I'm really excited, to be honest.
No, I love it. And a great kids' playground and, like, you know, biking and skateboarding area too. We actually spent a summer there a few weeks ago. A few years ago, sorry.
Yeah. Biggest skating bowl in the Southern Hemisphere. Is that true?
Yeah. Oh, wow. I mean, I knew it was good and pretty impressive, but I didn't actually know it was that good. So there you go. But no, I do love it up there. And as I said, I'm not biased at all, but I do love a bit of manga fine. Actually, my cousin's got a batch there as well. So yeah, spend plenty of time there. It's going to be a hard one to beat, I'll tell you that much.
But let's move on to the property perspective, fellas. And Stuart, I think everyone knows, you know, on the face of it, how expensive Queenstown is. Yes. But incredibly... values have held up remarkably well from the post-COVID peak.
And looking at our report, you know, you can see that they're only 5% below that peak value compared to somewhere like here in Wellington, where I'm based, still 25% down that peak, you know, and I think Auckland's still, you know, 15 to 20% back as well.
So I wonder, Stuart, if you can take that viewpoint of the property market, can you summarise sort of more recent movements in the local market and
And especially, I think, focusing on some of the development that's been going on across Queenstown for the last few years, because I know there's been quite a lot, and how they continue to, I suppose, build entry-level property so that it is able to be lived in by, I don't know, I'm going to call them regular New Zealanders, but it's not too unachievable for people to move to and live in a place like Queenstown.
yeah yeah so i mean queenstown i've lived here for 16 years now i would say the first four years the mantra was always great place to live but people get sick of making friends and connections and then a few years later they're moving on so people just get sick of meeting people making friends and and i'm to start over again i would say after four years the last 12 years that stretch changed um
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Chapter 4: How are foreign buyers impacting the New Zealand property market?
So we've got an arterial route going all the way around Queenstown Centre, so you can avoid driving through Tenton Centre to get to Fernhill. We've got a seven-lane roundabout coming in, well, not roundabout junction coming in at Frankton, but they're spending hundreds of millions on infrastructure. So all that's coming, which I think ultimately is going to increase the price again.
But, you know, Queenstown's been very resilient price-wise, going back to your original plan, question there i think that we're not the market's not taken off yet it's been a lot busier this year but you can see um i think next year the prices are going to be really moving we've had resilience and probably from 24 momentum 25 and i think 26 could start to see that growth
Yeah, interesting to see how that plays out. As you said, going out a bit further, not like stretching too far out because obviously there is limited land there to be developed, but at least building a bit further out where they can build those units and actually support the number of people there. So, yeah, certainly has been changing quite a lot.
Like I said, I've been to Queenstown a few times in the last year couple of years and amazing just to see how much development's been going on there. Both, like you said, large shops and shopping centres and things like that, but also closer to town where, you know, more hotels are still going in as well. So trying to support that long term.
We've got Christchurch builders, Auckland builders coming down here. You know, we've completely booked the trend when it comes to construction and going to continue to do so. There's probably, in the pipeline, there must be 8,000 houses. Our population is about 60,000.
Yeah, incredible.
Yeah, there's so much development and construction in the pipeline and cracking on here. Hence the reason, like I say, a lot of builders are moving down here for work.
Yeah, absolutely. I think as long as it's supported by the infrastructural spend and investment too, then it's all worthwhile, right? So yeah, great to see and great to hear that's going on. But let's move back to Mangawhai then. And Mark, Mangawhai itself is quite small. It'd be even smaller than Queenstown, of course. But I think...
In itself, it's quite representative of those smaller beachside towns as the rest of Northland. So I think there's a lot of relevance for much of the Northland area. So talk to me about the market there as well. What does make it tick? You sort of talked a little bit about this before, but what's been happening through that spring and early weeks of summer months?
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Chapter 5: What are the expectations for interest rates in the upcoming year?
I can remember talking about this back in 2013, you know, turning sections on the market and now they're all taken up. There's, you know, buildings everywhere.
Yeah, I think as confidence improves into next year, I expect that, you know, we'll start to see those people buying a second house or, Starts to see the investors coming out again, too, and MangaFile will no doubt be on people's list as well. Just before we do get to you, Dan, I promise we're going to come to Tauranga shortly.
Both Stuart and Mark, you both mentioned sort of that overseas market. We did see the Active Investor Plus change to the visa this week, I think it was, or last week. So have you seen an impact of that with conversations or talked to real estate agents who are now really excited about that? Mark first, maybe, and then I'll just get Stuart's thoughts, too.
in terms of foreign buyers who are now keen to come and buy above that $5 million mark?
Yeah, so agents are excited about it, but they're getting sort of like few and far between. Like, for example, Tiara Lynx and Tara Edie, they kind of have their internal sales teams working that are dealing directly with their contacts. We're not... We had the odd...
four to five million dollar house going on but it's few and far between but okay the lower prices it's been a bit hard for some of the real estate agents at the moment um like under 1.5 million it's it's a bit of a slow burn for them but uh you know
Yeah, fair enough. I think, yeah, but that elite market certainly is available in Queenstown, Stuart. I mean, I think that when we did the math to see how many properties are actually worth more than 5 mil, it's sort of 7,000 or 8,000 across the country. And as a percentage, it's quite small, but the percentage in Queenstown is a lot higher, 1,000 properties of however many are there.
It's probably a lot more going to affect your market. And I know that there are plenty of agents around in Queenstown who are talking about, you know, the foreign buyer ban needs to change because they know that's a huge market for them. So how strong has that conversation been?
Not just in the last week or two, but I think, you know, over the last couple of years as to what might happen in this area and now what the change might be now that's been opened up.
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Chapter 6: How is the rental market performing in Tauranga?
So I think that just makes it so unique in a way, like you say, it's so attractive to those foreign buyers out there. And if they've got the ability to buy... And like I said, the foreign buyer ban, of course, wasn't an RBNZ thing, but it was a government thing, you know, and that certainly changed the game for them. But, you know, might not be there forever.
And obviously this Actor Investor Plus Visa too just changes things a little bit for some of that really high end of the market. So it'll be interesting to see how that play out. But let's move back up to the north to Dan. So for Tauranga Investors,
And I don't know if you want to talk more about some of those more holiday areas like Papamoa Beach, because Tauranga is so unique in that, right, that it's this, you know, it's a main centre. It's one of the largest cities in New Zealand, but it's also got that holidaying beaches coastal area as well. So what's sort of happening in the market up there?
And are there rental market hotspots as well? Like, how's that city centre looking as well? Like, I hate to say it, but when I have been to Tauranga in the last few years, and obviously with the council and issues you guys have had there, that city centre has been a bit tired and there's been issues with
the council being overthrown and things, but now we've got that new council, are they starting to have an impact? How's that infrastructure and that building of development happening in that Tauranga area and then spreading out to those more coastal areas?
Yeah, I guess the central city, Devonport Road there, kind of looks like Queen Street in Auckland, to be honest, at times. It's kind of definitely got that sort of feel in someone who lived in Auckland. I know what Queen Street kind of looks like over the last five years. So, It's a very interesting one. There's obviously a lot of change that's happened within the council.
I guess the part around it is really the infrastructure in the building that's going on down the main street there, the Strand and Devonport. You've got, you know, I actually don't remember how many. I think it's over 100 apartments that are above the new Farmers Building. You've got all new infrastructure being built down on the Strands.
There's a five-story building there for Hobick, which is a law firm there. It's called the Northern Quarter. There's a lot of change starting to happen in that central city, especially with the whole change of the central precincts. They've got a massive... new kind of kids playground. They've got rid of the old car park down the waterfront there. It's a great location.
You can go and do some manus off the wharf there down on a summer's day and it's packed. And they've kind of rebuilt the whole new area just around the back of it, around the whole central city to bring everybody back in. So there was a lot of change there, which I think is great. There's some great motivation there to be buying around those areas. When you talk about
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Chapter 7: What developments are happening in Mangawhai and how do they affect the market?
You've got a new off-ramp off the toll road for Papamoa that leads to the Sands building area. And then you've got all the land to the Kaituna River. So there's a lot of infrastructure there, housing projects and housing starting to kick off. And then you go the Tauranga side and you go Omokoroa, which is a 15 minute drive, 15 minute drive, 20 minute drive to the north of Tauranga.
But we've got a huge infrastructure change and we're building all new toll roads linking to reduce the congestion that's happening within the city. And that's kind of been a bit of an issue. I guess it's been here for quite some time. There's obviously the congestion, but it is starting to release gradually. I guess, look, I lived in Auckland. I know what traffic jams are.
The traffic jams here are not. And if you move from Auckland like people do, they'd realize it's not really a traffic jam. So it's 15 minutes. We're good. It takes you an hour to get on the motorway in Auckland sometimes. So, yeah, look, huge change. Starting to see outside influence. I'm starting to see people bring their investments back into here.
And there's some really good rental returns in part of the kind of northern areas of Tauranga, like Gate Park, Reardon. They got really good rental returns and we're seeing first time buyers move into those areas. And we're definitely seeing that increase. And I do a lot of different real estate agents and I know the numbers of rentals in the city in July was just over 360.
And it was quite hard to find people into those homes. We're currently at 215. So in a four month span, a heavy reduction in that. And that's starting to bump up rental prices. And we're starting to see investors starting to come back in the market.
Yeah, I mean, it all adds up, right? And like you said, you kind of got this great world where you've got the more expensive side of things and you've got the beautiful part of that, but you've still got some entry-level accessible properties as well, so you can sort of corner both of those markets.
Hey, look, I think that's a really, really good wrap-up of all the things going on in each of your regions. I want to move to kind of expectations for next year and maybe starting off... with sort of the interest rate view, right?
So I'm keen to get your guys' takes on where things are at, maybe how some of the conversations are going with your clients in terms of, you know, what's your viewpoint? How are they feeling? Are they now starting to pick those longer terms? Are they stung a little bit by those longer terms jumping up a bit sooner as well?
So I don't know, Stuart, do you want to talk to us about sort of how your conversations have been around, you know, fixing mortgages and interest rates and expectations as to how that might play out in the first few months next year?
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Chapter 8: What are the predictions for property sales and tourism during the summer months?
Bang, just like that. So all of a sudden now, you're panicking. You're not panicking, but you're reaching out to your clients again and saying, look, We might need to revisit that information we've given you. Here's the latest. Here's the reaction. Now, that was probably over the last week or so.
Now, fast forward a couple of days, you're sitting, you're taking stock and say, hang on a minute, everything's not all of a sudden rosy, just like that. The economy is not just immediately recovered. there could be a bit of an overreaction here. So we're trying to say to our clients that, look, what's most important is what's most important to you and your budget. That's always the bottom line.
What we're talking about in the market, we'll second guess it at our peril. Look what's just happened. There is an argument to suggest that maybe this wholesale cost in the next quarter will come back down and calm down and maybe some of these rates will drop down a little bit more. So what is important to you, essentially? Three weeks ago, I was leaning towards some on one and more on three.
Now I'd be saying, well, if you can get three below five, wrap it up, move on with your life. Some people are leaning towards that five years at 4.99. Great rate, historically fantastic. Look at the last five years, we've had over 7%, we've had almost 2%, we've had 4.5%. A lot can happen. So the bottom line will always be what is important to you.
Because right now, what's just happened just before Christmas has told us, you'll get it wrong if you second guess it, and it's extremely volatile, and, and, and, nobody's actually got a clue. So what is important to you?
Yeah, it's so true. And I mean, especially I suppose now we've had a switch in governor and Anna Bredman's clearly got a different way of doing things and viewpoint. And it sounds like she might be more transparent. So maybe we will get a better read on how things are going to play out. But she's also reiterated the point that it'll be data dependent.
And what we think we're going to do today might change when we come back in February because the data we receive in the next two months is going to be quite different. Do you have any extra thoughts to add to that, Mark? Any differences or any thoughts on the new governor and how she's sort of come out the last week and tried to crawl those fears from the markets?
Yeah, so very similar to Stuart, looking at clients where, yeah, it's just been really hard with what's happened over the last, us expecting rates to continually drop coming into Christmas and then with the last OCR reduction and then all of a sudden, Rates move up and now we're revisiting that conversation with clients and seeing them as well.
We actually had clients locking in at 499 for five years before they went up. So I found that that was their decision, which I went along with, but I was more in favour of the one to three year fixed rates and just splitting them up.
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