Residential property values in Auckland’s North Shore have continued to grow in the latest quarter. The September quarterly median hit a peak of $950,000 according to the Real Estate Institute of New Zealand (REINZ). This is a $291,000 or 30% increase from the same period twelve months prior when the median was $731,000.
Sales volumes have fallen slightly quarter to quarter in September 2015 with 1,392 sales concluded, although transactions are still up on the same period in 2014 when 1,162 properties were sold. Volumes have steadily increased since the post GFC trough where transactions were as low as 700 in 2008. On average, time on the market continues to stay at some of the lowest levels seen in recent years. Homes in the North Shore are taking just over one month to sell on average, at 33 days, staying consistent with the June 2015 quarter figures.
Exemplifying the continuing demand for property in Auckland, is the weeks to sell figure i.e. the time it would take to sell the total current inventory of houses for sale, assuming no further listings are taken on. This currently sits at an historical low level of 9.7 weeks. The long term average is 25 weeks. Total inventory in the region is just over half the long term average with 6,815 homes for sale, and with 3,052 monthly sales, remaining well above the long term average, this explains the shortage of stock and extremely low weeks to sell ratio after months of these trends influencing the region.
Spotlight on Albany
Albany, situated 17km north of central Auckland, was until quite recently, a town in its own right, but continues to feel quite separate from the city, with much of the land on the northern side still semi rural.
Albany has experienced significant population growth, increasing its population size between the 2006 and 2013 census 40.9%. Albany is located in one of the fastest growing areas in the Auckland region, with a medium projected population growth of 2.2% annually to 2043 which would take the population to approximately 109,000. This is compared with national projections of 0.8% and 1.3% for Auckland.
Following steady increases since a lull in 2009 the median sale price for Albany has experienced a sharp increase over the past twelve months to sit at an unprecedented value of $1,047,500 in the September 2015 quarter.
This is a 21.8% or $228,500 increase from the same period twelve months prior. Compared with the June quarter when the median was $990,000 it is a 5.8% increase over three months. The number of sales were up in the last quarter with 284 properties sold in the suburb. Days on the market are at a historical low of just over one month to sell in the area, down from the long term average of 45 days to sell.
The suburb is extremely well served by transport, retail and education infrastructure which adds to the attraction of the area. The Northern Express bus route offers frequent and fast access to Auckland’s CBD. The Westfield Mall which includes a wide range of hospitality and entertainment providers anchor the retail mix which also includes the bulk retail mega centre and boutique shopping within Albany Village. Massey University has a large campus in the suburb while there are a range of public and private schooling options.
Given the above it is understandable that there is growing demand to own property in this location. Along with this there is capacity to intensify the Albany town centre with apartments and townhouse complexes therefore it is no wonder we have seen a number of projects currently underway and in planning stages for the location such as the 200 apartment Albany Rose Garden complex.
North Shore Median Price Hot Spots
Spotlight on Mairangi Bay
Situated 15km across the Waitemata Harbour from Auckland CBD on the North Shore, in contrast to Albany, Mairangi Bay, a long established suburb, has had a more subdued rate of population growth between the 2006 and 2013 censuses.
In seven years between census the population increased 1.3% with medium projections for the greater board area to grow a further 1.5% annually up to 2043, slightly above the Auckland Regional forecast of 1.3%. Mairangi Bay boasts an extremely high level of home ownership with 78% of residents living in the area owning their own home.
Over the past year Mairangi Bay has experienced a real spike in median sale prices, with $1,350,000 being the median in September 2015 quarter after passing the $1,000,000 value in the final quarter of 2014. This is equal to a 58% or $500,000 increase in twelve months, and 5.6% ($72,000) increase over three months. Houses are selling in 38 days on average, ten days more rapidly than the same period twelve months prior, after dipping down to only take 30 days to sell at the end of March 15. The number of sales dipped slightly in the last quarter with 37 properties sold in the suburb.
Still More Push than Pull
Tighter credit controls aimed at Auckland residential property investors, the introduction of a brightline test and new regulations aimed at overseas buyers will slow the Auckland housing market in 2016. However the positive drivers of the market, predominantly, low interest rates, population growth and a regional housing shortage will continue to hold sway resulting in continued value appreciation over the year.
Although increased house-building activity means new housing supply is coming on board, the residential building consent levels are still falling short of Housing Accord aspirational levels, therefore construction activity still needs to ramp up substantially to fully alleviate the housing shortage. The New Zealand population has been growing at its fastest rate for over a decade, with the annual growth rate of 1.9% for the year to June 2015 outpacing that of Australia. In Auckland, record net migration rates have seen the population being boosted by 28,395 from migration alone.
Following the lowering of the OCR to 2.75%, the cost of borrowing money is at historically low levels. However the RBNZ has indicated there may be more OCR cuts to follow to return inflation rates within the required 1-2% range.There are headwinds ahead with mortgage lending restrictions in Auckland being tightened, coupled with new tax rules for investors. From October 1, all overseas buyers of property in New Zealand must have a local bank account and Inland Revenue tax number as well as supplying a tax number from their home country. Any capital gains from selling a residential property within two years of purchase will now be taxed, unless the property is the seller’s main home, has been inherited from a deceased estate or transferred as part of a relationship property settlement. Figures from the Reserve Bank of New Zealand (RBNZ) show that in August about a third of mortgages went to property investors. Starting November 1, the limits on bank lending to low deposit borrowers comes into force, where property investors borrowing against an Auckland property will need to have a deposit of at least 30%. Banks will still be limited to not more than 10% of their lending to owner occupiers who have less than a 20% deposit on a house, while elsewhere around the country, that restriction is being eased and banks can have 15% of their lending for low deposit borrowers.