Auckland Property Market Research May 2018
Reasons for Investing in Residential Property
In our latest Crockers Property Investment (CPII) survey in association with IPSOS shows there has been a decrease in the proportion of property investors who regard their investment portfolios to be ‘part of their retirement savings’ (down 9 points). However, this is still the main reason to own investment property. Interestingly, since tracking began in September 2014 there has been a gradual increase in those who have investment properties to ‘get more of the good things in life’. The results also show there has been a decrease in those ‘saving for their children’ (down 7 points).
There has been a substantial decrease in the proportion of investors who chose property over other investments for its ‘tangibility’ (down 13 points to 55%), while ‘safer returns’ has had an increase (up 6 points to 42%).
Some 65% of investors stated that their residential property investments ‘provide them with a supplementary income’ (down 2 points from Jul ’17). The proportion of those for whom investment property is the ‘main source of income’ has increased after a drop in Jul ’17 (from 13% to 17% this year). The proportion of investors who own just a single investment property has risen 11 points to 41%. There has also been an increase in those who own three properties (up 8 points).
Note: All Questions Excludes “Does Not Apply” Responses.
Crockers Property Investment Index
This month the Auckland Rental Property Investment Index increased. This is largely due to a substantial decrease in the proportion of people looking to divest, coupled with an increase in the proportion of investors planning to increase the size of their portfolio. A similar growth occurred last May, indicating a seasonal pattern perhaps delayed slightly due to post-election uncertainty.
The Auckland Rental Property Performance Index has increased slightly this month. This is due to an increase in the proportion of investors expecting ‘same’ returns, coupled with a decrease in those investors who are expecting ‘worse’ and ‘better’ returns.
Building Consents & Median Sales Prices
This month we compare the Auckland 2017 median sales data with Auckland building consent data (the number of new dwellings consented). In 2017 there were a total of 10,355 building consents issued between February and December. The most building consents were issued in November (1,450), and the least in April (726). The three major spikes in consents are also highlighted by small increases in the median sales price. For example, from February to March the median sales price increased from $800,000 to $890,000 and building consents increased from 800 to 942.
A similar increase is also seen from October to November, when the median sales price increased from $840,000 to $865,000 and building consents increased from 944 to 1,450. It is also worth noting that these results are to be interpreted carefully, as there is usually a delay between a house being consented and it being put on the market; and also because the sales prices in new developments can vary markedly.
Source: REINZ - Reserve Bank of New Zealand
Auckland Sales & Rental Update
Auckland Median Prices & Sales Numbers
The median sales price for Auckland residential properties has increased from $847,000 in February to $860,000 in March. Meanwhile, sales volume has increased from 1,752 to 2,546. This is at a slightly lower point than March last year (2,761 sales), and given the net increase in housing stock, indicates a decreasing proportion of available property being sold.
Auckland Rental Prices
The average Auckland rent for 2-bedroom residential properties has increased slightly this month from $488 to $489, while the average 2-bedroom rental across New Zealand has increased from $397 to $400. This has resulted in the Auckland 2-bedroom premium decreasing to 22%.
The average rent for 3-bedroom properties in Auckland has decreased slightly from $627 to $626, following a sharp increase in February. Average rents across New Zealand have increased from $472 to $480. This is largely a result of Wellington 3-bedroom rental prices increasing from $517 to $527. Consequently, Auckland’s 3-bedroom premium has decreased to 30% this month.