January 4, 2017

2017 Insider Tips from the Auckland Property Market

The Auckland property market has been under scrutiny of late. Analysts are questioning whether the market will continue to rise, whether buyers or sellers hold the power, and how properties are changing. These six insider tips highlight these issues and more.

The Top Three Suburbs in Rental Increases

The first six months of 2016 have seen Mt Albert, Parnell and Sandringham increase their rental yields by the highest percentage. Mt Albert increased 14.7% ($89), Parnell increased 11.7% ($97) and Sandringham increased 11.6% ($73). This sharp increase is attributed to their central location that still offers the feel of suburban living.

New Zealand is Leading the World’s Housing Market Boom

Auckland is at the centre of an exceptional property boom, offering lucrative selling opportunities for property owners. According to a global ranking of house price growth by estate agents Knight Frank, New Zealand came second to Turkey. But once the impact of inflation was removed, New Zealand properties came on top with an annual price growth of 11%.

Properties Are Hitting the Million-Dollar Mark

Ten years ago, the average property in Auckland sold for $500,000. New Zealand’s QV house price index has found that the typical Auckland home is now valued at $1,013,632 in August 2016, a 15.9% increase over the last year. The average value nationwide is $612,527.

Property is Outperforming Shares

As global economic uncertainty remains high, the property market continues to fare better than the share market. As investors look towards property to park their equity, this is contributing to the limited supply.

Smart Houses Are Hot Property

Houses fitted with smart automation are increasingly being built in Auckland - especially new apartments. Smart houses automated appliances include intelligent lighting, multi-room audio, automatic temperature control, renewable energy sources, smart devices controlling home functions, security access and control, intercom, and entertainment controls.

Reserve Bank of New Zealand May Take Measures to Cool the Market

Auckland’s property market has been increasing for a long time, and that boom is spreading throughout New Zealand. In short, there has not been enough new construction in Auckland and throughout New Zealand to meet demand. While this could be seen as inconsequential in many countries, the Reserve Bank of New Zealand (RBNZ) recognises that the high cost of living makes this a housing affordability issue for New Zealanders. By relative income, Auckland is the fourth most expensive city to live in. The pressure put on ordinary New Zealanders, and the risks to the financial system and broader economy, make the Reserve Bank of New Zealand more likely to act. The usual move for the reserve bank would be to increase interest rates. However, they currently are not in a position to take that measure. Inflation is too low in New Zealand already, and an interest rate rise could decrease market prices further. As they’re unlikely to lift interest rates, it’s logical that they will take other methods to constrain housing prices. The most likely measure is to tighten home loan limits through limits on debt-to-income ratios or loan-to-value ratios. Those measures would make it harder to be approved for new loans, which would have the desired effect of lowering demand. Want to Learn More about Your Local Market? Find out more about property in Manukau, Pakuranga and Botany by contacting our real estate consultants or property managers on 09 555 9100. You can also view this week’s property listings here.