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Auckland Property Market Research May 2017
Suburb Review: North Shore
Average rents across the North Shore remain slightly above the average for the greater Auckland region (Pukekohe to Rodney). Over the past 12 months, North Shore 3-bed rentals had an average weekly rental price of $611, 3% higher than the average greater Auckland 3-bed rental of $596. 2-bed rentals on the North Shore were also 3% higher with an average rental price of $484, compared to $470 for greater Auckland.
Looking at the individual suburbs, rental price increases for 2-bed properties has varied considerably between suburbs; meanwhile 3-bed property rental price increases have been more consistent across the North Shore suburbs bar Glenfield where prices generally rose faster.
North Shore suburbs have generally experienced a substantial growth in average sales price since 2013 with average sales price growth only easing slightly in the year to March 2017. Most notably, average selling price in Devonport grew 1% in the year to March 2017, compared to 19% in the previous year. This trend was also evident across the other main North Shore suburbs – particularly Albany, East Coast Bays and Glenfield.
Meanwhile the average sales volume has eased slightly in the year to March 2017 in most North Shore suburbs compared to the year to March 2016 (except Takapuna, which held steady).
Review of Rental Prices
Opinions on current rent prices
An increase of investors surveyed in the latest Crockers CPII survey in association with IPSOS, feel that rents are ‘below a fair price’ increasing from 30% in October 2015 to 34% on April 2017. Mirroring this, those feeling that rents are above a fair price have increased from 9% to 13% in the same period, indicating a division in opinions. Increases in costs associated with the rental property – rates, insurance and maintenance, are likely contributors to a decision to increase rents.
Planned rental price increases
Over half of the investors interviewed are planning to increase rents in the next 6 months (57%, up 11 points from Sep ’16). Most of those planning to increase rents are anticipating an increase of 1-2%.
Factors that would influence an increase in rent
A number of factors come into play when considering rental increases. An increase in local rates remains the most likely to cause an increase in rents (65%, down 2 points), but other costs like property maintenance and insurance costs continue to play a part. One factor which has had the biggest increase as a likely influence to increase rents is an increase in interest rates (50%, up 18 points) compared to last year. If landlords are going to be hit by the banks, they are looking to pass those costs onto their tenants.
This month the Auckland Rental Property Investment Index has improved for the third consecutive month. The majority of investors still plan to make no changes to their portfolios, however there has been increase in the proportion of investors who plan to increase their property investments along with a slight decrease in those planning to divest, leaving a net gain.
The Auckland Rental Property Performance Index has eased slightly this month. This softening is due to a slight decrease in the proportion of investors who believe their property investments will perform better over the next 12 months coupled with an increase in the proportion of those who believe their investments will perform the same.
Auckland Sales & Rental Update
Auckland Median Prices and Sales Numbers
The median sales price eased slightly in February from $805,000 to $800,000 but recovered in March to a new high of $890,000 (9% higher than at the same point in 2016). Meanwhile, sales volume has increased for two consecutive months to 1,661 in February and 2,761 in March. However, despite these increases, sales volume remains nearly 15% lower than at the same point in 2016.
Auckland Rental Prices
Over the past 2 months, average Auckland rents for a 2-bed residential property increased from $474 to $476 in February, and then to $481 in March. 2-bed rents across New Zealand also increased over the same period, with an increase to $385 in January, and then to $395 in March. This has resulted in the Auckland 2-bed premium decreasing slightly to 22% in March.
Rents for 3-bed properties in Auckland increased from $599 to $606 over the past 2 months, while 3-bed rents across New Zealand remained steady in February and then increased to $460 per-week in March. This has resulted in the Auckland 3-bed premium decreasing slightly to 32% in March.