The latest price data points to Eastern suburbs residential values consolidating at current high levels. We expect sales activity to lift from recent lows and this is already evident in January and February 2018 when compared to the same months in the prior years. The rest of the year should see further improvements in activity.
Values in the Eastern Suburbs ended 2017 on a high note and have held reasonably firm entering the 2018 year with a median sell price of $1,578,500 in the first quarter of 2018, down just 2.6% on the prior quarter. Despite this slight decrease, values in the Eastern Suburbs market remain well underpinned through a strong labour market, persistent low interest rates, above average migration levels, a challenged supply backdrop and the slight loosening in Loan to Value (LVR) lending restrictions. The fundamental supply and demand imbalance in the market will continue to drive prices higher but at a more modest rate.
Sales activity decreased significantly over the latter part of 2017 due to uncertainty caused by the election and consequent change of government. In combination with this, the lending restrictions imposed by the Reserve Bank and Mortgage lenders has caused a tightened credit landscape and a resulting softer market to begin the 2018 year. Over the March 2018 quarter the Eastern suburbs witnessed a 21% decrease in sales activity since the same quarter a year prior, this follows a similar trend of Auckland wide where a 23% decrease took place over the same period.
The most recent statistics however, seem to indicate that the fall in sales activity has bottomed out with the sales number for January and February 2018 up 12% on the same months in 2017.
The slowing in Auckland wide sales activity over the last year has resulted in a lift in inventory levels in the region. Market dynamics show the amount of property available to sell increasing by 32% over the 12 months to February 2018. At current levels of inventory the existing stock would sell down in just 18 weeks. While having risen from the super tight conditions evident in 2015 and 2016 the current 18 weeks still sits below the longer term average of 23 weeks.
Despite the regional housing shortage, new development within the Orakei Ward is slowing. Difficulties in amalgamating development sites in established residential suburbs, and stricter lending conditions have made progressing new development projects more difficult. The Orakei ward (encompassing the Eastern Suburbs) witnessed a decrease in consent numbers, down 29% over the 12 months to February 2018. Over this period the largest decrease was in Apartment consents down 34% followed by standalone dwelling consents down 29%. Retirement consents on the other hand have more than doubled since the prior year.
Upper Value Bands Increase Share of Sales
Proportionate shares of differing price brackets over the past three years illustrate the increasing values witnessed within the Eastern suburbs. The number of transactions completed at over $2 million dollars has experienced a year on year increase and now constitutes 33% of the market. Just 21% of all property transactions made in the Eastern suburbs were under $1 million in the 12 months to March 2018, down from 29% in 2015.
The largest value increase witnessed in the Eastern Suburbs over the 12 months to March 2018 was in Orakei, up 19% on the prior year. Other value increases of interest include St Heliers up 14% and St Johns up 9%. A 16% decrease in value was witnessed in Parnell although this can be explained by the fact that 43% of sales were for apartments which are usually more affordable than stand-alone homes in the suburb.
Transactions in the Eastern suburbs property market were largely dominated by residential houses in the 12 months to March 2018. Parnell has seen the largest mix of housing type transactions with 66% being multi-unit dwellings, 43% of which were in apartment sales in the 12 months to March 2018. Sales in St Johns and Kohimarama of multi-unit dwellings were also prominent, holding a 26% and 24% share of all transactions respectively.
Spotlight on St Heliers
St Heliers is an affluent seaside suburb in Auckland and holds the third highest median sell price of the Eastern suburbs after Remuera and Orakei. St Heliers reached the highest median value on record, $1,868,500 over the March 2018 quarter, up 13% on the December 2017 quarter. Despite recent price consolidation across a growing number of suburbs, St Heliers continues to outperform, reflecting strong ongoing interest in the area. Transaction counts have recently bounced back from declining levels over calendar 2017. The 21% increase in activity over the March 2018 quarter looks to mark the beginning of a recovery in sales activity.
Spotlight on Remuera
Characterised by a popular shopping village, parks, walkways and large houses, Remuera holds the title as the most sought after area of the Eastern Suburbs, on average holding the highest median sell price. Remuera values have recovered from the election period where sales activity and values took a dip. The March 2018 quarter has seen values remain reasonably flat although at an elevated level of $1,892,500, down just 0.4% on the December 2017 quarter. Sales activity looks to have decreased sharply over the three months to March 2018 however it is important to note that the latest statistics are provisional and figures for January and February were in fact, up 3%.
Eastern Suburbs Hot Spot Map – 6 Months to March 2018