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NBR caught up with Barfoot & Thompson managing director Peter Thompson on Thursday at the ground-breaking ceremony for Willis Bond & Co's new apartment block in Auckland's Wynyard Quarter.
NBR: What's Barfoot & Thompson's role here?
Peter Thompson: "We're the selling agents."
You've been selling off the plans?
We've sold about 70%. It's a wonderful project. It's all going well.
When did it first go on sale?
Any impact since October 1 on selling the final few?
Not really, the main bulk went through the middle period. But the big thing is having today; turning the soil gives confidence. Once this announcement goes out it should see a level of more activity. Like any big project, between 60% and 80% is always quite slow, but once they start building, people see it's going ahead and we expect to see an increase in activity.
Looking at the Auckland real estate market overall, how have things been going since October 1 (when new requirements for foreign buyers to get an IRD number and open an NZ bank account were introduced, and the "quick-flick tax" came into force)?
Not so much from October 1 but just the past couple of weeks, it's been the school holidays [Sept 28 - Oct 11] and traditionally that does slow down the market. Auctions have been a lot slower, with success rates going from. say, around 70% under the hammer down to as low as the mid-30s, early-40s but just this week alone it's got back up to around that 50% mark. So I think we are seeing a turn in the market, but it's just a little too early yet to to say 'Is that school holidays, is that part of October 1?
China also also basically restricted the amount of money people can take out of country on and that's affected [the market] worldwide so there's been a lot of different things.
Are you anticipating any impact after November the 1 (when tighter LVR rules for investors kick in)?
No not as much. I don't think so. I think the major changes have been made that are going to affect the market. There's still some legislation people are still waiting for to see whether or what the actual fine print is so is quite crucial to the market. But all it is is that people will just take a period of time to digest [the changes], but a different type of buyer will come into the market.
There's some talk about Australian and particularly Indian buyers coming in. Are you seeing that?
A lot of people put the emphasis on China, but we've had a lot of Eastern Europeans; a lot of buyers from Russia have been over buying; Australians have certainly been in force especially in the building trade; there's a lack of builders around here in Auckland because they all went to Christchurch.
I guess our dollar falling has been a bit of a counter-balancing force?
Absolutely. I think we're still going to see the offshore buyers coming here but people migrating to Auckland - the rates are just phenomenal. And they've got to have a roof over their head.
In terms of the money coming out of China, there seems to be contradictory messages. In July, Phil Twyford was quoting Juwai.com's prediction that $11 billion would wash into the Auckland property market with a relaxing of rules on foreign investment over the next couple of years. But then there was the Shanghai sharemarket crash the same month and the recent clamp-down on taking cash out of the country.
Certainly they tightened up from September 1 for a three-month period. They certainly restricted how much money can come out. Now, how they control that is always very interesting to see but certainly we're seeing a drop in the number of Chinese buyers. But they sort of indicate that's going to be for a period of three to six months. And then they may open it up. Obviously with the crash in the sharemarket they had to slow it down and just settle their country down — and I think that's done it.
Bill English seems to be cabinet's designated "bad cop" on property values. He's always trying to talk down the Auckland market and he was recently saying there could be a crash in eight years. Do you think that's a constructive comment?
I think, to be honest with you, we've been trying to talk the Auckland market down because it has got out of control. Prices won't fall down. There won't be a crash. All that will happen is people will simply take their houses off the market and wait. We've seen that over the years. There's always a dip in the market when you go up so high; there's always a slight comeback but not like the crashes economists were predicting several years ago.
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