Auckland Property Insight September 2019
Healthy Homes Compliance, Residential Tenancy Act & Compliance Costs
Healthy Homes Act Compliance
This month in our latest CPII survey in association with IPSOS, we asked Crockers newsletter recipients (mainly landlords) whether their rental property(s) were compliant with the Healthy Homes Act as of 1st July 2019. Overall there was only a small proportion of investors who were not compliant with the Act when it came into effect.
Healthy Homes Standards
Following on from this, we asked landlords whether they were aware of the new healthy homes standards that will come into effect on 1st July, 2021. Encouragingly, 84% of respondents were aware of the new standards two years out from their introduction, whilst 66% understood their obligations under the new standards. As most of these landlords use Crockers they are likely to be better informed than those not working with professional property services companies.
Residential Tenancy Act Changes
We also asked investors about the changes to the Residential Tenancy Act, such as limiting tenants’ liability for careless damage in rental properties. Once again, there was an encouraging number of respondents aware of the changes being implemented (74%). In comparison with the healthy homes guidelines, there may be more education required to get investors up to speed on the Residential Tenancy Act changes.
Finally, this month we asked investors how they believe the rental market will react due to increasing compliance costs within the market. An overwhelming 81% of investors believe rents will increase either as a result of the increase in compliance costs or overall increase in demand.
Crockers Property Investment Index
Both the Auckland Rental Property Investment Index and the Auckland Rental Property Performance Index have remained stable this month, due to investors’ confidence in the market remaining fairly stable.
Suburb Review – Central Auckland
Unsurprisingly, Central Auckland rents remain above the average for the greater Auckland region (Pukekohe to Rodney). Over the past 12 months, Central Auckland 3-bedroom rentals have had an average weekly price of $716, 11% higher than the average greater Auckland 3-bedroom rental of $643. Central Auckland 2-bedroom rentals have had an average price of $551, 9% higher compared to $507 for greater Auckland.
Looking at the individual suburbs, rental prices for 3-bedroom properties have shown the largest increase in the City Centre and the suburb of Grey Lynn / Westmere (up 4% each). The suburbs of Mt Eden, One Tree Hill and Remuera have all grown by 1%, while City Bays is the only suburb to record a decrease (-2%). Prices for 2-bedroom rentals have experienced the largest increase in the past year in Ponsonby, Mt Albert / Pt Chev and Mt Eden (5% each) and have stagnated in Remuera (0%).
Median sales prices have continued to stagnate across Central Auckland over the past 12 months. Pt Chev has experienced the largest decrease (down 9%), Ellerslie / Panmure has recorded the only increase (up 5%), whilst City Centre, Mt Roskill and Ponsonby have all decreased by 5% in the past year. This shows that the housing market in Central Auckland is certainly softening. Much of this could well be due to a slow-down in new apartment developments.
The average sales volume has shown signs of rebounding in some suburbs. Mt Roskill (16%) and Mt Eden (11%) have recorded an increase in their sales number this year, whilst City Centre / Pt Chevalier has recorded a 29% decrease.
Auckland Sales & Rental Update
Auckland Median Prices & Sales Numbers
The median sales price for Auckland residential properties decreased from $850,000 in Jun-19 to $830,000 in Jul-19; this is a decrease similar to the same time last year.
The sales volume increased from 1,819 in Jun-19 to 1,894 in Jul-19. Despite this being only a small movement, this is an unseasonal increase suggesting that the overall market supply is starting to rise.
Auckland Rental Prices
The average Auckland rent for 2-bedroom residential properties increased from $518 in Jun-19 to $520 in Jul-19, while the average 2-bedroom rental across New Zealand increased to $450 from $430, driven by a 7-point increase to $360 in Christchurch. This has resulted in a decrease in the Auckland 2-bedroom premium.
The average rent for 3-bedroom properties in Auckland increased from $642 in Jun- 19 to $662 in Jul-19, whilst the 3-bedroom rental prices in New Zealand remained at $500. This has led to an increase in the Auckland 3-bedroom premium this month.