Whenever the topic of buying houses in Auckland is raised we know the conversation usually takes the line of the average house price being too high. But in an ever-changing market it’s good to get some insight from the Director of Research at CoreLogic, Jonno Ingerson, on the statistics and trends behind these values.
Firstly, the statistics from the most recent monthly AV House Price Index:
- Across NZ, values are up 12.6% annually
- Auckland is up 22.6% annually or 6.7% over the past three months
- That varies across Auckland by suburb - the fastest increase is Papkura at 11.4%
- Unsurprisingly, Auckland Central sits at 5.4%, as affordability in the CBD continues to wane.
The fastest rate of increase outside Auckland comes from Hamilton at 9.0% over the past three months. Hamilton hasn’t had this kind of growth in the quarterly index since 1989 !
Barfoot and Thompson have released the following statistics on the Auckland market as well:
Beyond the stats, the following trends in the Auckland market are worth noting:
- “There has been an increasing number of auctions not reaching reserve, along with fewer bidders at auctions and lower attendances at open homes” (Ingerson, 2015).
- Some real estate firms have noticed a drop in foreign buyers
- There is also evidence of a slowdown in valuations being requested on Auckland properties. Although not definite, a slowdown in valuations should lead to a slowdown in sales.
- New listings are experiencing peaks and troughs at present. Given the time of year this is unexpected.
The Reserve Bank and the Government are also putting in place measures to slow things down in the Auckland market, such as:
- 30% deposit needed for investors if lending is required
- A new ‘brightline test’ mean any property sold within two years of purchase will be liable for capital gains tax (owner occupied property is exempt)
- Foreign buyers will require NZ bank account and IRD number (linked to origin country tax number).
The question is whether or not the Auckland market is slowing down or is about to?
Consider that the median sales price usually drops in the middle of the year and picks up again around this time of year. REINZ September monthly figures show a NZ wide 4.2% increase to $484,650 – up by 15.4% on same time in 2014. However looking at monthly measures can be quite turbulent and getting a true measure comes from judging long term trends. Lastly, we must consider the LVR restriction changes which should allow more local buyers back into the market. But with valuation activity picking up in everywhere but Auckland, it appears that Aucklanders may be leaving for cheaper provincial horizons.
Ingerson says that all things considered, trying to measure this is fickle and although the Auckland market may slow down a little in coming months, it is areas further afield that will likely see an increase in market activity.
For the full article by Ingerson, have a read here on the QV website.
While there is lot's of facts and figures out there on what the market is up to it's always great to speak to an expert. If you'd like to get a smarter mortgage or need help getting into your next property get in touch today.