Digital Technology Contributes To Increased Demand In Real Estate Industry
Digital technology and online buying is changing the real estate industry, with people now content to spend millions of dollars on a home – despite not having set foot onto the property.
The latest lockdown – and continued Alert Level 3 for Auckland – has seen a surge in interest for ‘lifestyle properties’, with buyers paying top dollar, sight unseen, for homes in areas such as Queenstown, Wānaka, Waiheke Island, Tauranga and Hawke’s Bay, according to New Zealand Sotheby’s International Realty (NZSIR) managing director Mark Harris.
NZSIR has sold three of the top-five house sales in New Zealand for this calendar year: a Closeburn home (Queenstown) sold for $16.1 million, a Jacks Point (Queenstown) property sold for $14.5m and a Lake Hayes (Queenstown) home sold for $14.5m. The Closeburn and Jacks Point homes were sold via online appraisals and bidding, without the new owners physically being on the property to view.
NZSIR has achieved $1.1 billion in total sales for the year to date. Of that, $105 million were sales where the purchaser didn’t physically view the property. Some $35m of the online sales were during the latest lockdown.
“Covid has changed people’s mindsets,” Harris says. “There is clear interest in finding lifestyle living near a mountain, a beach or a lake, with fresh air and room to move. House prices have risen more than 30% since lockdown last year and a shortage of stock, along with low interest rates and a strengthening economy, means people wanting homes have confidence their investments will grow.”
Purchasers are getting a lot more confident with online decision-making, Harris adds.
“Over lockdown people have become used to relying on technology like Zoom, and that has extended into real estate. Buyers are now conducting their inspections from their laptop or phone via video, from anywhere in the world. NZSIR has also conducted plenty of online auctions, with people bidding remotely and the auctioneer conducting proceedings from their home; it’s quite remarkable to watch.”
Remote working and work-from-home has now become normalised and as a result, NZSIR is seeing a growing trend towards buyers seeking lifestyle destinations with easy access (via flights or a drive) to Auckland.
“The days of having to rely on an office environmentin the city have changed and people are confident about working from home with their tech. This is combined with the increased interest in NZ as a safe haven with expats, Aussie and Singaporean purchasers. Quite often they are either Kiwi expats or have a Kiwi connection of some kind, so there is a sense of ‘coming home’,” Harris says.
A lack of housing stock, a shortage of building materials, low interest rates, a bubbling economy and renewed interest in ‘Brand NZ’ will continue to drive prices up, Harris believes.
“Prices may climb more slowly, but there’s no diminution of confidence in the market, and we’re seeing substantial and ongoing offshore interest, especially from Australia. Brand NZ is still running hot.”
The Government’s imposition of stricter LVRs and its negative gearing changes means the market is also protected from any sudden shock, Harris believes. Sentiment can shift markets, but the big banks have adopted a more cautious approach to lending, and purchasers can see the vaccine rollout putting an end to lockdowns.
“New Zealand will slowly but surely open up again to the world. That means both general and premium properties will continue to be in demand.”