01 Apr NZ owners selling up quicker – Kelvin Davidson
Property owners in New Zealand are holding their properties for shorter periods. In other words the period of ownership is actually reducing. Find out why agents find that information so valuable. We discuss a report on those stats with Kelvin Davidson from Core Logic New Zealand.
Kevin: One of the things that a lot of real estate agents will look at is periods of ownership of a property. Why is that important? Well, it’s one of the indicators as we move more into an environment of predictive selling that agents will want to know at what point in time does a seller, or the owner of a property, look at becoming a seller. Interesting to read a report from CoreLogic in New Zealand, the CoreLogic Market Pulse that came out recently talking about that in New Zealand.
Kevin: I’m joined by Kelvin Davidson from CoreLogic in New Zealand. Kelvin, thanks very much for your time.
Kelvin: It’s a pleasure.
Kevin: I understand that ownership in New Zealand is getting less. In other words the period of ownership is actually reducing. Is that correct?
Kelvin: Yeah. So, whole periods have started to come down just a little bit in the last year or two. Although it’s really important to point out that they’re still quite a lot higher than they have been in the past. So back in 2005 it was only about four years on average between buying and selling, and moving onto the next one. Now it’s up at about eight. So, yeah, there’s been a pretty big rise and I think that’s really tied up with properties just getting less affordable. People can’t afford to move as often as they used to.
Kevin: Obviously it’s not at its highest point now, but is it far from it?
Kelvin: It’s not far off, actually. So there has been a bit of a dip recently, as I say, in the last couple of years. But, yeah, only about falling from eight years on average to about seven. So, yeah, it’s still close to that peak. But, as I say, still a lot higher than the four that it was a decade ago.
Kevin: Are you noticing is there much of a difference between first home buyers, how long they’ll hold a property and say multiple property owners, as an example?
Kelvin: Yeah. First home buyers tend to hold for a shorter period than investors. It wasn’t so much the case for much of the period we’ve looked at. But certainly in the last couple of years we’ve seen a bit of a gap open up. I think that’s really just down to restrictions on speculative behaviour, really. So, those investors or multiple property owners, they just … the environment just hasn’t been right for them to trade as much as they used to. Capital values have flattened off so there’s just not that real drive to flip, basically. Because you’re just not making the capital gains that you used to. As well as restrictions on finance.
Kevin: I guess many people are motivated to sell because of an improving market, and not wanting to wait until it comes back a little bit so that they technically, I guess, will lose money by selling at the wrong time. How much of that is speculative, and how much of it is a necessity would you say?
Kelvin: Hard to say. There’s always going to be a bit of speculative behaviour going on. I think for the most part we know from some of the surveys of investors and what we hear from talking to investors that a lot of them genuinely are in to be long-term holders. So, I think speculative behaviour will go on but I don’t think it’s the norm. It has because a lot less common lately, as I say, given that flattening of capital values. But also there’s been restrictions put in place by the government too.
Kelvin: We’ve got this bright line test here now, which is basically a capital gains tax. So, if you buy and sell within a relatively short period of time you’re often on the hook for capital gain. So there’s just lots of things we’ve all built up to, to make it just a bit much less attractive to speculate and to flip.
Kevin: Well, there’s been different markets around the world. Of course, Sydney and Melbourne have improved dramatically. We’ve watched that over the last several years. Auckland has been one of the stand outs in this region. What are you seeing between Auckland and New Zealand in terms of hold times? Is there much variation?
Kelvin: Auckland has been a hotter market than the country as a whole, and consistent with that… hold periods have been shorter in Auckland. So people have … There has been a little bit more of an incentive there to try and make a quick buck, I guess if you want to put it like that. Yeah, so those Auckland hold periods have been shorter and generally they’ve followed the same path as the country as a whole. Yeah. It just flattened off a bit lately. But still shorter.
Kevin: Excellent. Thank you very much for that insight, Kelvin. Kelvin Davidson is from CoreLogic in New Zealand. Thanks for your time.
Kelvin: No worries. Thank you.