Auckland Property Insight November 2019
Healthy Homes Compliance and Residential Tenancy Act
Healthy Homes Standards
This month in our latest CPII survey in association with IPSOS, we again asked landlords about their awareness of the second tranche of the healthy homes standards that will come into effect on 1st July, 2021. The proportion of those who are aware of the standards and understand their obligations has remained stable. Concerningly there has been an increase in the proportion of investors who are unaware of the standards (up 11 points to 18%).
Residential Tenancy Act Changes
We have also asked investors about the changes to the Residential Tenancy Act; an example of a change being made to this act is limiting tenants’ liability for careless damage in rental properties. There has been an encouraging increase in awareness of the changes (up 10 points on Aug ‘19 to 84%).
Investment Types Risk Perception
Property – Safe as Houses?
We also asked respondents about their perceptions around the riskiness of each type of investment, and what investment types the New Zealand government should be encouraging to improve the economy.
Riskiness of Investment Types
We asked our sample to nominate the three investment types they regard as becoming safer over the last 12 months, and the three that they perceive to have become riskier. Using these two scores, below we have derived a nett safeness / riskiness level at which the investments are perceived. In the past 12 months the difference between the riskiest and the safest investment has been reduced, largely due to commercial property reducing in perceived riskiness; and currency and shares increasing.
The dominant preference for investment property in New Zealand has been cited by economists as undermining growth in true economic productivity. Naturally preferring their main form of investment, it is not surprising to find property investors think differently, clearly believing that the New Zealand government should be encouraging residential property investment in order to improve the economy. Investing in residential property remains the most commonly cited investment type (57%), followed by shares/stocks (39%) and commercial property (37%).
Price Distribution Review
Auckland vs. Rest of New Zealand: Dwellings (Excluding Apartments)
Comparing the numbers and prices of houses sold in Auckland between Oct ‘13–Sep ‘15 and Oct ‘17–Sep ‘19, there is a slight peak in sales in Oct ‘17–Sep ‘19 for sales in the $1–1.49 million price bracket, perhaps showing that this appears to be the bracket where the majority of Auckland dwellings are selling.
Comparing Auckland with the rest of New Zealand during the Oct ‘17–Sep ‘19 period shows a very different distribution of house pricing. Housing in the rest of New Zealand hits a high at $400–499k, while Auckland reaches its peak at $1–1.49 million, highlighting the disparity between prices in Auckland and the rest of New Zealand.
The average sales distribution for Auckland dwellings seems to have remained flat in the past 12 months. This follows a large decline between Sep ‘15 and Sep ‘18. It is also worth noting that over the past 5 years there has been an overall decline in the number of sales. Meanwhile, in the rest of New Zealand there has been a notable increase in the sales distribution for homes selling between $600-699k and $700-$799k, perhaps indicating that demand in Auckland has been pushing up prices in the rest of New Zealand.
Auckland vs. Rest of New Zealand: Apartments
When comparing the numbers (and prices) of apartments sold in Auckland between Oct ‘13-Sep 15 and Oct ‘17-Sep ‘19, the two lines follow roughly the same pattern; of note is the fact that there was a higher number of sales in the $1-1.49 million category in the latter period. When comparing this with Rest of New Zealand apartments for the period Oct’17-Sep’19 there are notably less apartment sales.
Auckland Sales & Rental Update
Auckland Median Prices & Sales Numbers
The median sales price for Auckland residential properties increased from $820,000 in Aug ‘19 to $848,000 in Sep ‘19; this represents the first increase in sales price since May.
The sales volume also increased from 1,761 in Aug ‘19 to 1,823 in Sep ‘19. This is a divergence from the pattern seen over the last two years – a decrease between the months of August and September.
Auckland Rental Prices
The average Auckland rent for 2-bedroom residential properties decreased from $515 in Aug ‘19 to $514 in Sep ‘19, while the average 2-bedroom rental across New Zealand also decreased from $445 to $430. This has resulted in the Auckland 2-bedroom premium increasing to 20% this month.
The average rent for 3-bedroom properties in Auckland decreased from $652 in Aug ‘19 to $642 in Sep ‘19, whilst the 3-bedroom rental prices in New Zealand decreased from $510 to $500. This has resulted in the Auckland 3-bedroom premium remaining the same.