Auckland Property Insight June 2019
Apartment Review of the 4 Metros
Rentals Across New Zealand
The average Auckland 1-bedroom rental currently sits at $375 (year ending April 2019), this is compared with $365 year ending April 2018. Wellington 1-bedroom rental prices have increased as well, and now sit at $313. Interestingly Dunedin 1-bedroom rental prices have now surpassed those of Christchurch. This is as a result of Christchurch rental prices restabilising after the undersupply of housing following the Christchurch earthquakes, coupled with an increased demand for 1-bedroom rental properties in Dunedin.
The pattern seen in 1-bedroom rentals is similar to the pattern we see in 2-bedroom rental prices. The key difference between the two is that for 2-bedroom rental prices Wellington exceeds the national average rental price ($427). Whilst Dunedin is yet to surpass Christchurch on 2-bedroom rentals, the two now sit at similar levels of $333 and $351 respectively. Auckland 2-bedroom rental prices continue to rise and now sit at $501 in the year ending April 2019.
Sale Price & Number of Sales Distribution
After 2012 there was a sharp increase in the number of apartments selling above $500k. However, this has started to decrease in 2017, with these levels now becoming fairly flat in the past year. Apartments under $500k continue to become less common. Interestingly there has been a gradual decline in the overall availability of apartments since 2015.
Crockers Property Investment Index
Both the Auckland Rental Property Investment Index and the Auckland Rental Property Performance Index have experienced sharp increases this month, a result of increased confidence in the market following the government's decision to scrap the proposed Capital Gains Tax.
Letting Fees & Capital Gains Tax
This month in our latest CPII survey in association with IPSOS, we asked investors about Letting Fees and Capital Gains Tax, below is their response.
Last November the government banned letting fees with the intention to reduce price barriers, and to encourage consistency in the rental market by ensuring tenants do not face different up-front costs depending on who they rent through.
As a point of comparison, we asked these questions at the same time last year in preparation for the introduction of Letting Fees.
Agreement that Letting Fees will / have achieved objectives
Last May 39% of investors agreed that letting fees would achieve their sought objectives, whilst 24% disagreed. This year there was a sizeable increase in those investors who were neutral to the issueConsequence of Letting fees becoming banned
Following letting fees becoming banned, 84% of investors made no changes to how they manage their investment properties. A small portion of those (16%) increased rents to cover the cost of the changes. This shows the overall impact of the new law on tenants has been minimal.
Capital Gains Tax
Investors were asked whether or not they were more likely to increase their property investment portfolio, given the Governments decision to scrap the proposed Capital Gains Tax.
Following the government’s decision, the majority of investors are happy keeping the size of their investment portfolio the same (81%). Double the number plan to increase their property investment portfolio than reduce it (13% c/f 6% respectively).
Auckland Sales & Rental Update
Auckland Median Prices
The median sales price for Auckland residential properties decreased from $856,000 in Mar ‘19 to $850,000 in Apr ‘19; the median sales price now sits at the exact same point as April 2018.
Auckland Median Sales Prices
The sales volume this month has exhibited the normal seasonal decrease, falling from 2,006 to 1,608; a net annual decrease. Homeowners are becoming less likely to sell their property amidst the softening housing market, with the lowest number of April sales recorded in the past five years of tracking, despite there being vastly more stock available (so the proportional decrease in sales will be even larger).
Auckland Rental Prices
The average Auckland rent for 2-bedroom residential properties has increased significantly from $489 in Mar ’19 to $513 in Apr ’19, while the average 2-bedroom rental across New Zealand decreased from $435 to $430. This has been driven by decreases in 2-bedroom rental prices in Christchurch and Dunedin, this has resulted in an increase in the Auckland 2-bedroom premium after a historical low last month.
The average rent for 3-bedroom properties in Auckland decreased from $648 in Mar ’19 to $642 in Apr’19. Whilst the 3-bedroom rental prices in New Zealand have decreased from $510 to $500. This has led to the 3-bedroom premium to slightly increase this month.