From the frontlines: End of week report for week ending July 31 2020
Jul 31, 2020
The market overall in most centres is extremely strong (we would use the term 'red hot' but it's a bit emotive 😊) and we are seeing crazy levels of activity!
Our clients in Wellington, Christchurch, Whangarei, Tauranga, Hamilton, Dunedin, Hawkes Bay, Palmy, are all reporting the same things, massive interest levels from home-buyers and very strong investment demand as well.
At our meeting in Manukau this week with our Advanced Results Team, the owner of the largest Real Estate franchise in South Auckland and several agents from his office ran us through the activity and sales results as we do most weeks, and they are as strong as we've ever seen in over 20 years of investing.
Auction rooms so full that 40+ people had to stand outside (see the photo, crikey 😳), multiple-offer situations on almost everything within a day or two of listing, some with 10+ offers! Agents desperate for stock and not enough coming to market to even closely satisfy demand.
This is from the frontlines, what is ACTUALLY happening, not what the media are reporting or what commentators are saying 'could' or 'should' happen. This is happening right now.
Even in this environment we are doing some great deals, but it brings with it challenges which we need to navigate. We've been through several booms and busts before so know how to work them, but it is always a dynamic and changing environment and taking your foot off the pedal for even a few weeks can see your market knowledge slip behind.
Jere are just a couple of fundamental challenges and opportunities happening at the moment:
✅ VERY easy to sell good stock at premium levels. Increased margins from natural market demand, price increases between purchase and sale, reduced holding times, and increased trade options such as contemporaneous settlements. Overall, a perfect market for selling trade property!
💪 Harder to source the deals as there are limited listings and high competition. They are still there but take longer to find and secure. Agent relationships and market knowledge are always important, but are excessively important right now!
🕵️♀️For buying rental property:
✅ Finding Positive-Cashflow property (even in main centres) is currently achievable again thanks to such low interest rates and solid rents. Vacancy rates are low for most residential property (excluding CBD apartments) with high tenant demand.
💪 Similar to sourcing trade deals, it is more challenging to source good rental properties due to lower listings and high competition. Demand for Home & Income properties is disproportionately high as investors search for yield, and at least in Auckland the demand for subdivisable property is extremely high and premium prices are being acheived.
Yields are bing squeezed again, which are being offset, at least for now, by low interest rates.
One thing is for sure...This market is anything but dull! There is a lot happening and those who know how to navigate the current market conditions are doing some really great deals!
This is a market which can put psychological pressure on people, particularly new investors and/or traders as it can seem impossible to get anywhere when you keep missing out on deals time after time. If that's you, stick in there, this is just another stage of the cycle and it will change, but in the meantime, keep going, deals are being done so there's no reason they can't be done by you (it may just take some extra patience and perseverance).
We hope you've had a brilliant week everyone. Have a great weekend and bring on another awesome month of property fun in August!
Love from the Assetlab crew 😍😎