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Auckland Property Market Research October 2017
Net Migration Flows & House Prices – Is There a Connection?
Recent migration data from Statistics New Zealand indicates that net migration continues to grow at record levels as New Zealand’s economic growth outpaces many other developed countries, including Australia1. Using Net Migration figures from Statistics New Zealand and sales data from REINZ, we can compare long-term migration across major New Zealand cities and look for links to the trends seen in housing prices for those areas. Of interest is the clear pattern of migration dips in March-May and November each year. This suggests that selling property may not be recommended during these periods as demand may be lower, and conversely, these periods could be good times to buy.
Focusing on the major centres in the North Island, Auckland has generally experienced steady growth in house prices over time, with the Median House Price increasing 35% since July 2014. Over the same period, Net Migration has contributed approximately 7% to Auckland’s population2, showing that median house prices have increased at a faster rate than net migration. Similarly, since July 2014, Wellington Median House Price has increased 30%, while Net Migration’s contribution to Wellington’s population has increased by approximately 1% over the same period3.
Looking at the South Island, in Christchurch we see growth in the Median House Price of 10% since July 2014, while Net Migration has contributed approximately 5% to Christchurch’s population4 over the same period. Over the same period, Dunedin Median House Price has increased 41%, while Net Migration has contributed approximately 2% to Dunedin’s population5.
Interestingly, both cities show net gains in migration each January, which could reflect student influxes but also domestic migration, as January is a popular time for changes in jobs and other lifestyle variables. Note: Link to the RNZ article about Dunedin’s economic revival is at http://www.radionz.co.nz/news/regional/299252/is-dunedin-out-of-the-doldrums
2 Based on an Auckland population of 1,415,550 from the 2013 Census (Stats NZ) <http://www.stats.govt.nz/Census/2013-census/profile-and-summary-reports/quickstats-about-a-place.aspx?request_value=13170&tabname=>
3 Based on a Wellington population of 471,315 from the 2013 Census (Stats NZ) <http://www.stats.govt.nz/Census/2013-census/profile-and-summary-reports/quickstats-about-a-place.aspx?request_value=14322&tabname=>
4 Based on a Christchurch population of 341,469 from the 2013 Census (Stats NZ) <http://www.stats.govt.nz/Census/2013-census/profile-and-summary-reports/quickstats-about-a-place.aspx?request_value=14758&tabname=>
5 Based on a Dunedin population of 120,249 from the 2013 Census (Stats NZ) <http://www.stats.govt.nz/Census/2013-census/profile-and-summary-reports/quickstats-about-a-place.aspx?request_value=15022&tabname=>
Intention to Move Out of Auckland
In our latest Crockers Property Investment (CPII) survey in association with IPSOS we asked investors about their intentions to move out of Auckland and we compared responses to similar questions asked in June 2012, July 2015 and June 2016. The increase in Dunedin house prices discussed above has been partially explained by incoming Aucklanders.
82% of respondents to this month’s survey plan to stay in Auckland over the next year – this has increased slightly compared to previous years. A relatively small proportion of Auckland property investors are planning to relocate elsewhere within New Zealand (7%, down 3 points since June 2016), while only 2% are planning to move overseas within the year – on par with the results seen in previous waves.
For the few that plan on leaving Auckland, the main reasons are ‘quality of life’ (64%), ‘family reasons’ (36%) and ‘housing affordability’ (27%).
Of the total sample, 98% live in New Zealand and own property. Perhaps not surprisingly, given the nature of the Crockers database, the majority (64%) of respondents felt that they would ‘retain their property for rental income’ should they need to move away, up 6 points since June 2016, while only 25% would ‘sell’ their property (down 4 points since last wave).
The majority (75%) claim they would ‘use a professional property management company’ – this figure has grown 10 points since 2016 and is currently at its strongest since we first asked this question in June 2012. Compared to 2016, fewer investors would be willing to ‘manage the investment property themselves’.
Crockers Property Investment Index
This month the Auckland Rental Property Investment Index has decreased, but remains on par with the Performance Index. This reflects an increase in the proportion of investors planning to ‘make no changes’ to the size of their property portfolio, coupled with a corresponding decrease in those planning to ‘increase’ their investment, resulting in the decrease shown below.
The Auckland Rental Property Performance Index has also decreased, following two consecutive months of improvement. This movement reflects an increase in the proportion of investors who feel their portfolios will perform ‘the same’ and a decrease in those who feel that their investments will perform ‘better’.
Auckland Sales & Rental Update
Auckland Median Prices and Sales Numbers
The median sales price has increased slightly from $825,000 to $831,250, but is now approximately 1% lower than the same time last year. Meanwhile, sales volume has improved slightly from 1,791 to 1,916 but remains lower than the same point last year (20% down from August 2016).
Auckland Rental Prices
The average Auckland rent for a 2-bedroom residential property has remained stable at $479, while the 2-bedroom rent across New Zealand has decreased slightly from $400 to $385. This has resulted in the Auckland 2-bedroom premium increasing slightly from 20% to 24%.
The average rent for 3-bedroom properties in Auckland has softened this month from $616 to $610, while rents across New Zealand have also decreased slightly from $460 to $450 – resulting in the Auckland 3-bedroom premium to increase slightly from 34% to 36%.