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Auckland Property Market Research December 2017


Price Distribution Review

Auckland vs Rest of New Zealand: Dwellings (Excluding Apartments)

Comparing the numbers and prices of houses purchased in Auckland between the periods November 2011 to October 2013 and November 2015 to October 2017, there has been a clear shift in sales price to the $800k+ range and few properties sold for under $400k; this is consistent with Auckland’s average house price of $840k in October 2017.

Comparing Auckland with the rest of New Zealand during the November 2015 to October 2017 period shows a stark contrast in house price distribution. In the rest of New Zealand there were relatively few houses sold for $800k+ and still a sizeable volume of houses sold for under $400k. If you'd like any advice on what this means for your property management business, email Liz or give her a call on 09 887 7455.

The number of houses in Auckland with a sale price of $1 million plus has increased substantially since October 2014. Meanwhile, the number of houses sold for less than $800k has trended down since October 2015. For the rest of New Zealand, the price increases across all $600k+ price ranges have been more gradual.

Auckland vs Rest of New Zealand: Apartments
Comparing the number (and price) of apartments sold in Auckland between the periods November 2011 to October 2013 and November 2015 to October 2017, considerably more apartments valued at $400k+ were sold, as was also seen when compared to the rest of New Zealand.

Labour’s Housing Policy Announcements

This month in our latest CPII survey in association with IPSOS, we gauged the reaction among property investors to the new Labour Government’s recent housing policy announcements. Where applicable, we have compared results to June 2017, about four months prior to the change of Government and when these policies were simply pre-election promises.

Awareness of the Housing Policy Announcements
Claimed awareness among property investors was highest for the Healthy Homes Guarantee Bill (31%) and the ban on foreign buyers (27%). Claimed awareness of the remaining four policies stood at about 1 in 5 investors.

Impact on Residential Rental Portfolio Intentions
Most investors (59%) stated that they would make no changes to their property portfolios as a result of these recent policy announcements, down 10 points from June. Meanwhile, 17% (up 2 points) said they would reduce their portfolio size and 19% (up 6 points) didn’t know. This suggests that although a growing proportion of property investors may be taking a ‘wait and see’ approach, the majority are still looking to make no changes to their rental property investments. Larger portfolio investors (portfolios valued at $1m or more) were more likely than smaller portfolio investors to reduce the size of their rental property investment, no doubt because even a small percentage decrease in prices can have a large monetary value. 

Impact on Rental Property Rent
Keeping these policy announcements in mind, the majority of investors (61%) claimed that they would increase rents to some extent, although this is lower than in June (68%). Meanwhile, the proportion of those who didn’t know whether they’d increase rent rose to 19%, up 12 points from June. There was a slight decline in the proportion not planning to increase rents – down 5 points to 20% in October. This suggests a greater uncertainty among property investors, where more investors have adopted a ‘wait and see’ approach to rent increases in the wake of the new Government’s housing policy announcements and plan to reduce net migration. Larger portfolio investors were more likely to raise rent by 3% or more versus smaller portfolio investors while the latter group were more likely to leave rent unchanged.

It is also important to note that this survey was conducted prior to the recent release of the new valuations for Auckland city properties (with the associated expectations of increased rates), which is expected to lead to rises in Auckland rents over coming months.

Auckland Sales and Rental Update

Auckland Median Prices and Sales Numbers
The median sales price has remained stable at $840,000, although it is approximately 3% lower than the same time last year. Meanwhile, sales volume has increased from 1,679 to 1,775 this month – approximately 17% lower than October 2016. This could indicate an increase in people looking to capitalise on their properties before prices fall too much, contributing towards a price-quashing supply-and-demand imbalance.

Auckland Rental Prices
The average Auckland rent for 2-bedroom residential properties increased slightly this month from $484 to $488, while the average 2-bedroom rents across New Zealand decreased from $395 to $385. This has resulted in the Auckland 2-bedroom premium to increase from 23% to 27%.

The average rent for 3-bedroom properties in Auckland has increased slightly from $612 to $618, while average rents across New Zealand increase from $450 to $460 – resulting in the Auckland 3-bedroom premium softening slightly from 36% to 34%. The recent release of the new valuations for Auckland city properties (with the associated expectations of increased rates) is likely to raise Auckland rents over coming months.