In line with the wider Auckland region, levels of sales activity have fallen and value gains moderated over recent months within the North Shore residential market.
The local market recorded a median house price of $1,035,000 over the March 2017 quarter. This equates to an increase of 5.6% or $55,000 compared with the same quarter a year prior when the median sat at $980,000. While the quarterly median saw a fall from its previous quarter level, when quarterly fluctuations are smoothened with the use of 12-month moving averages of monthly medians, the continuation of the upward trend albeit at a slower pace is more visible.
Current market conditions though are most clearly illustrated by the decline in sales volume, a trend which has been apparent since late 2016. The number of sales in the North Shore market was 966 over the first quarter of 2017, down 24.6% compared with the same period a year earlier which saw 1,282 sales.
The moderation in value gains and the fall in sales activity can be attributed to a number of factors. There is increased anecdotal evidence that Banks are tightening their lending criteria for home buyers. This is adding an additional constraint to the market which was already under the influence of regulatory changes imposed upon investors by the Reserve Bank of New Zealand (RBNZ). Unlike the RBNZ’s higher deposit requirement, tighter credit assessment policies have implications across all buyer types. In addition, the slight edge up in mortgage rates also has an impact on the overall demand with relatively higher borrowing costs.
The softening of the market is also reflected in the total inventory available to the market as shown in the adjacent graph. Both the total inventory and weeks to sell figures have trended upwards over recent months and are now close to their historical averages. On a North Shore market level, easing of market conditions are illustrated by the average days on market figure which stood at 47 days over the March 2017 quarter, up from the 42 days figure recorded in the same period a year earlier.
Given the above market trends it is clear that the tightening in the availability of credit is currently having the largest influence upon the market. Other fundamentals however continue to strongly underpin conditions. Auckland’s housing shortage is widening given the current levels of net migration and residential construction activity. Moreover, the combination of capacity constraints and the fact that development finance is also harder to source is limiting the ability of the development sector to meet the regional requirement, as fewer projects proceed.
When the North Shore market is analysed on a submarket level, the wider Devonport area which encompasses the Devonport, Bayswater, Belmont and Narrow Neck suburbs command the highest median price. The Devonport area is followed by the Milford/Takapuna market which encompasses the Milford, Takapuna and Hauraki suburbs.
As per sales activity, the East Coast Bays market, which is spread over a very large area and encompasses 15 suburbs stretching from Campbells Bay in the south to Long Bay in the north, ranks first in the number of sales completed. Lower transaction activity and longer marketing times of higher priced properties is apparent in the Devonport and Milford/Takapuna markets which saw the smallest number of sales and the highest days on market figures. On the other hand, Glenfield as the most affordable suburb has the lowest days on market and has the second highest number of sales completed.
On the supply side, difficulties faced by developers in obtaining finance, due to banks’ tighter lending criteria, is resulting in a slowdown in the growth rate of building consents in the wider Auckland region. The change is also apparent in the North Shore and Albany Wards where the number of new residential building consents have plateaued over the recent months following years of sharp increases. As illustrated by the adjacent graph, the building activity within the Albany ward is around 5 times the activity of the North Shore ward, given its larger area and availability of development land. In terms of property types, both wards have seen a proportionally higher increase in multi-unit dwelling consents over the recent years, although this trend was more profound in the North Shore Ward where the number of multi-unit dwelling consents significantly outnumber those for stand alone house consents.
Spotlight on Bayswater
Bayswater is a suburb in the North Shore ward and is situated between Devonport and Takapuna. It lies on a beautiful peninsula located just across the harbour from central Auckland. The Bayswater Marina that lies at the end of the peninsula offers regular ferry services to the Auckland CBD with average journey times of just 12 minutes.
The number of sales in the Bayswater residential market is typically very low with a 5 year historical average of only 4 sales per month. This makes the median house price in the Bayswater market very sensitive to the attributes of the properties sold over the analysis period. A good example is the March 2017 quarter where the local market saw only 3 sales with a median price $1,681,000. The previous quarter, on the other hand, recorded 16 sales with a $1,282,500 median. Therefore 12 month moving averages better illustrate price trends in the Bayswater residential market which continue to increase.
Spotlight on Greenhithe
Situated within the Albany ward, Greenhithe has been one of the fastest growing suburbs of Auckland over the last two decades. The population of Greenhithe has grown by 102% between the 2001 and 2013 census. Known for its beautiful houses and green parks, Greenhithe offers an attractive lifestyle within easy reach of main centres within Auckland with its high accessibility to the major highways.
Greenhithe recorded a median house price of $1,464,500 over the March 2017 quarter. The quarterly median was up 19.1% from the same quarter a year prior. Mirroring the trends of the wider Auckland, sales activity was down 24.4% over the same period, with 34 sales completed over the first quarter of 2017. While the monthly medians also present a volatile trend due to small sample sizes as a result of a suburb base analysis, 12 month averages of monthly medians indicate a continuation of price growth.
SALES HOT SPOTS (12 months to 2017 March)