The Auckland residential market slowed in the final quarter of 2015, reflecting the impact of changes in regulations and the traditional Christmas season slow down. Total sales volumes Auckland wide were down near 20% in December, compared with the same month in 2014. The median value rise was just 0.7% from November. As a result year on year value growth slowed to 13% compared with up to 24% registered earlier in the year.
The Eastern Suburbs market trends followed those of the wider region quite closely. The median value in the December quarter was practically unchanged from the September 2015 quarter and now sits at $1,345,000. Although flat over the last six months, values have still risen by 15.5% from the same quarter last year. Sales volumes were also down in the final quarter with 382 transactions completed compared with 543 a year earlier. Agency reports however confirm that there is still strong interest from buyers in the area.
The introduction of new high quality apartments to the area along with new projects selling from plans has seen median apartment values rise. The December quarterly median value of $841,800 has been steadily climbing since the third quarter of 2011 where the median was $560,000. Apartments and townhouses in the area currently take just over a month on average to sell at 33 days.
As stated above the Auckland market has taken a breather over the last 3 months and this is reflected in a slight loosening of market conditions, illustrated by weeks to sell all stock easing from 9.6 weeks to 10.3 weeks albeit this still sits well below the longer term average of 24.5 weeks. The latest figures released by realestate.co.nz show the number of sales in the region to be just over the long term average of around 2,100 sales. The total inventory continues to hold at low levels as new listings to the market fell short of the historical average with only 2,264 new homes listed for sale in January.
Given the population boom following a historical peak of permanent migration to New Zealand, where nearly 30,000 have settled in Auckland; over the last 12 months local and central governments continue to target the regional housing shortage.Building consents in Auckland have increased considerably according to Statistics NZ but as yet have not kept pace with demand. The housing shortage, population boom and low interest rates have combined over recent years to put unrelenting upward pressure on prices. Local government in particular is encouraging greater intensification of suburbs to help alleviate this shortage; therefore it is hardly surprising that there have been continual increases in building consents for new apartments, townhouses and units. Annualised consents for these types of buildings in the Orakei Ward which encompasses the Eastern Suburbs are shown in the graph below compared with stand alone houses. Apartment activity had been very flat post Global Financial Crisis (GFC) then began rising steadily from the beginning of 2012. Consent activity peaked again sharply at the end 2015 and should the consent numbers translate into construction activity, Eastern Suburbs residents will have more options for downsizing to lock up and leave accommodation with more achievable prices than a stand alone home in the region.
The market drivers still in play; a low interest rate environment; continual housing shortage; and record migration levels lead us to the conclusion that there will be further upward pressure on values in the Eastern Suburbs and Auckland housing markets, albeit that the introduction of greater regulation and the already high level of property values will see percentage growth slowing to single digit figures over the next 12 months.
Spotlight on Mt Eden
Located four kilometres south of the CBD, Mt Eden is centred around Maungawhau/Mt Eden; the highest natural point in Auckland city. Locality to the city and transport infrastructure along with being in reputable school’s zones has seen this leafy suburb stay highly regarded as a place to live for a number of years.
As a result the median sale price for property in Mt Eden has continued to grow sharply. In the December quarter of 2015 the median was $1,408,000 up almost 11% from the September quarter. When compared with the same quarter twelve months prior when the median was $1,121,000 it has recorded growth of 25.6%.
Closely mimicking the regional trend, volumes in the suburb are down with 84 sales completed in the three months to December, down from 100 in September. Properties are on average taking 40 days to sell in Mt Eden.
Spotlight on Meadowbank
A popular family suburb and home to the biggest urban wetland, Waiatarua Reserve, Meadowbank is located approximately 8km from Auckland CBD. Neighbouring suburb Remuera widely regarded as one of the most affluent in the country has seen flow on effects to the median values in Meadowbank. In the final quarter of 2015 the median was at an unprecedented $1,265,000, up 30% from the September quarter which saw a lull in values. From the same quarter 12 months earlier it is up 29% from when the median value was $975,250.
Following closely with regional trends, sales volumes are down, with 27 completed in Dec compared with 42 in the three months to December 14. Days on the market however are still low, showing there are still interested parties looking to buy in these locations, taking 35 days on average to sell a property in Meadowbank.
Eastern Suburbs Hot Spots