Auckland Property Insight August 2019
Net Migration Flows & House Prices - Is There a Connection?
Recent projected migration data from Statistics New Zealand indicates that there has been a slight drop in estimated migration to New Zealand following a peak in migration at the start of the year. This reflects changes in the economy and also government changes in migration policy.
Using net migration figures from Statistics New Zealand and sales data from REINZ, we can compare long-term median sales prices with net migration figures to see if net migration has any influence on sales prices. Overall there are clear spikes in migration figures in January-February and July of each year.
When comparing median Auckland sales prices (as most migrants settle in Auckland) with net migration figures, we see that spikes in sales do occur in the months following a large influx of migrants. Conversely, we see that median sales prices also fall in the 1-2 months following a migration drop.
This confirms that while building more houses is one way to manage the supply-and-demand issue, reducing immigration is also a useful tool.
Crockers Property Investment Index
Auckland Rental Property Performance Index
The Auckland Rental Property Investment Index has experienced a record increase this month reaching its highest point since Jun-18 – a result of a substantial increase in those who plan to invest further in the market.
Meanwhile, the Auckland Rental Property Performance Index has remained stable due to increases in both pessimists and optimists.
Expected Rental Property Investment Performance – Next 12 Months
This month the proportion of those who believe that their rental property investment performance will get better has reached its highest point since Mar-18 – optimists are now three times more numerous than pessimists.
Real Estate Experience
This month in our latest CPII survey in association with IPSOS, we asked investors about their most recent real estate experience below is their response.
Last Bought or Sold a Property
Investors were asked how long ago were they involved with buying or selling property, most respondents last bought or sold a property 1 to 3 years ago (57%).
Professional Dealt With
A real estate agent was the most common professional used when buying / selling a property (77%). A private sale (15%) and a developer (6%) were less common. No respondents used an investment company.
Real Estate Agent Experience
When asked about their last experience with all New Zealand companies and real estate agents, 59% of investors felt their experience was either ‘good’ or ‘excellent, whilst 41% rated their experience ‘poor’ or ‘average’.
Real Estate Agent Factors
When choosing a real estate agent, the most important factors for respondents was ‘level of communication’ (64%) and ‘personality’ (23%). Interestingly, only 9% of investors believed ‘the company they work for’ was the most important factor.
Auckland Sales & Rental Update
Auckland Median Prices & Sales Numbers
The median sales price for Auckland residential properties decreased from $860,000 in May-19 to $850,000 in Jun-19; this now sits on par with the same time last year. The sales volume decreased from 1,925 in May-19 to 1,819 in Jun-19. This is the lowest number of sales for the month of June in the last 5 years.
The reduction in both sales and prices is clearly indicating a cooling-off for the Auckland housing market, but as rents have also decreased slightly, the sales falls will not automatically be improving rental returns at present.
Auckland Rental Prices
The average Auckland rent for 2-bedroom residential properties decreased from $521 in May-19 to $518 in Jun-19, while the average 2-bedroom rental across New Zealand remained at $430. This has resulted in a very slight decrease in the Auckland 2-bedroom premium.
The average rent for 3-bedroom properties in Auckland decreased from $650 in May-19 to $642 in Jun-19, whilst the 3-bedroom rental prices in New Zealand remained at $500. This has led to a slight decrease in the Auckland 3-bedroom premium this month.