All figures compare the year to March 2019 with the year to March 2018
Auckland’s residential property market remains in a period of consolidation with values generally softening slightly.
Recent announcements by Government and the Reserve Bank, however, seem likely to boost the confidence of potential purchasers.
Firstly, the government announced that it had decided not to pursue a capital gains tax at the next election. This will have been welcome news to investors and may result in increased investor activity within the market, particularly given that it is likely that Loan to Value restrictions will see further easing over the course of the year.
Secondly, the Reserve Bank has reduced the OCR to 1.5%, a new record low for New Zealand. This has resulted in a reduction in mortgage rates.
The Eastern suburbs witnessed a period of exponential value growth from 2013 to 2016, with median values increasing by 83% over this period. The last couple of years has seen value growth consolidate, and, in fact, trend down more recently. The March 2019 quarter witnessed a median residential value of $1,455,000, down 6% when compared with the same period a year prior.
Values continue to remain at generally elevated levels due to the ongoing imbalance between demand and supply. This is likely to continue due to ongoing capacity constraints in the construction sector.
The property market continues to remain well supported by record low interest rates, unemployment holding at historically low levels and net migration remaining well above long term averages. Those supports will be bolstered by government and Reserve Bank decisions discussed above.
Transactional activity decreased by 19% when comparing the March 2019 quarter with the March 2018 quarter. The slowing in sales activity can be largely attributed to a combination of affordability constraints and the banks reigning in their lending, making it harder for purchasers to access credit.
When analysing Eastern suburbs residential transactions by value band, it is clear that high levels of activity continues to occur at the upper end of the market. The $2 million dollar plus bracket continues to hold the highest proportion of sales, making up 32% of all transactions over the year to March 2019. The distribution of transactions between value bands has remained relatively unchanged over the last three years, typical of a consolidating market.
Remuera, Orakei and Glendowie recorded the highest values in the Eastern suburbs, holding median values of $1,810,000, $1,755,000 and $1,625,000 respectively. Parnell witnessed the highest growth in median value when comparing the year to March 2019 with the prior year, up 23%. It is important to note however, that in 2018, 43% of transactions in Parnell were for Apartment accommodation, versus just 33% in 2019, impacting on the overall median value. In line with softer market conditions region wide, a number of suburbs have witnessed either no change in value or a slight decrease in value across the Eastern suburbs.
Stand alone residential houses dominate sales activity in the Eastern suburbs, making up 73% of all transactions over the year to March 2019. Higher density housing, was evenly split between Apartments, Townhouses and Units each holding a 9% share of total transactions.
The total amount of residential inventory available to sell in the Auckland region has crept up and is now close to its long term average of 10,150. As total stock increases, the number of weeks it would take to sell all the inventory also increases, now sitting at 26 weeks, just above the long term average of 23 weeks. With increased levels of inventory, buyers have more choice and the sense of urgency is also reduced, allowing people more time when making property decisions. Low unemployment and low interest rates also takes urgency to sell away from vendors. Those vendors that do need to sell, are in some instances, accepting prices at a slightly lower price.
Residential building consents in the Orakei ward reached a long term peak of almost 600 consents over the year to March 2019, up 161% when compared with the prior year. Apartments look to be dominating construction activity, holding a 40% share of all consents issued. The Eastern suburbs has witnessed an ongoing trend towards higher density housing, due to the Auckland Unitary plan.