The market remains in a consolidation phase and is likely to do so for much of 2019. We consider this to be a healthy period where prices form a solid base for the next inevitable growth cycle. As in previous cycles the attractive fundamentals of the Ponsonby and Surrounds market will ensure the long term price trend will remain positive.
After an extended period of rapid price increases, Ponsonby and surrounds has entered into a period of price consolidation. Values however remain at historically high levels, recording a median value of $1,435,750 over the December 2018 quarter. Encouragingly, sales activity ramped up over the last quarter of 2018, up 40% when compared with the prior September 2018 quarter.
Key market fundamentals including a growing economy with record low interest rates, elevated migration levels and an easing in the Reserve Bank’s loan to value restrictions have worked in combination with Ponsonby’s attractive fundamentals to hold residential prices strong.
Ponsonby residential prices continue to outperform the wider Auckland market year-on-year. Ponsonby’s median value of $1,790,000 for 2018 is well above the Auckland region’s median value of $848,000. The gap between the two markets has widened to over 70% in 2018 compared with just 59% in 2008, as Ponsonby’s residential prices continue to grow at a faster clip than the broader market.
When breaking transactions down by price bracket, the Ponsonby residential market appears to be in a league of its own with almost half of all transactions taking place over the year to December 2018 selling for over $1.5 million. When compared to the wider Auckland market, sales greater than $1.5 million made up just 12% of market transactions. Majority of the Auckland region’s market share is in the sub $1 million price bracket (66% share).
The number of building consents issued in the Waitemata and Gulf Ward decreased by 37% over the 12 months to November 2018, coming off their 2017 peak. Capacity constraints in the building sector due to labour and material shortages as well as increased funding challenges are all acting to slow the pace of development activity. As a result the housing supply shortage is likely to continue going forward, underpinning values.
Inventory levels in the Auckland market are starting to creep back up to their long term average as the total amount of stock available to the market increases. The number of days inventory is sitting on the market before being sold has also increased to 19 weeks, close to the long term average of 23. The overall increase in stock availability has taken away a degree of urgency in the market to buy and sell.