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Auckland Property Insight March 2019

ISSUE 154

Ring-Fencing

This month in our latest CPII survey in association with IPSOS, we have asked investors about the proposed ring-fencing law in terms of awareness, implications – i.e. financial impact, and options of dealing with the situation.

Awareness & Financial Impact

Some 72% are aware of the proposed ring-fencing law. The majority (56%) believe it will not have a financial impact on them, while 44% feel this will adversely impact them in terms of costs or reduced returns.

 

Options Likely to Be Considered

Though 40% of the investors aren’t likely to take action, 34% indicate increasing rents to offset losses. Smaller proportions of investors are looking at options like reviewing / changing the investment structure (18%), reducing the size of property portfolio (13%), or reducing property overheads like maintenance, etc. (7%)

Likelihood of Selling the Property

If the new law changes were to come into effect tomorrow, 24% would be more likely to sell their property whereas for 70% this wouldn’t impact their selling decision. This indicates that the ring-fencing law would have some impact on property owners’ selling decisions

Crockers Property Investment Index

Both the Auckland Rental Property Investment Index and the Auckland Rental Property Performance Index changed little this month, moving by only 3 and 2 points respectively. No doubt this reflects the slowing nature of the Auckland housing market at present.

Auckland Sales & Rental Update

Auckland Median Prices & Sales Numbers

The median sales price for Auckland residential properties dropped from $863,000 in December 2018 to $800,000 in January 2019; this is lower than the same time in 2018
($820,000) and 2017 ($830,000).

The sales volume has also dropped from 1,395 in December 2018 to 1,152 in January 2019.

Auckland Rental Prices

The average Auckland rent for 2-bedroom residential properties dropped marginally from $507 in December 2018 to $505 in January 2019, while the average 2-bedroom rental across New Zealand remained constant at $420. This has resulted in a slight drop in the Auckland 2-bedroom premium from 21% in December 2018 to 20% in January 2019.

The average rent for 3-bedroom properties in Auckland dropped from $636 in December 2018 to $588 in January 2019 – a sharper drop compared to 2-bedroom properties – while the average 3-bedroom rents across New Zealand dropped marginally from $500 in December 2018 to $495 in January 2019. This has resulted in a drop in Auckland 3-bedroom premium from 27% in December 2018 to 19% in January 2019.

 

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