7 Crucial Insights About the Auckland Property Market

Here's everything you need to know about the Auckland property market

The Auckland property market is so unique that when the Real Estate Institute of New Zealand (REINZ) publishes its monthly report, it includes a figure for all of New Zealand – excluding Auckland.

The median house price in the Auckland region is $848,000 (Sept 2019), $208,000 (32.5%) more than the next most expensive region, Wellington.

It's clear in the following graph that both Auckland and the West Coast are outliers. One is significantly more expensive than the next most expensive suburb – the other is significantly cheaper than the next cheapest suburb.

This is primarily for the same reason – population growth.

Auckland's population is expected to grow by over 30% in the next 20 years, whereas the West Coast is the only region where the population is expected to shrink.

On top of this, Auckland's residents are set to make up 40% of the country's population; it is the economic powerhouse of the country, and its economy is diversified.

These are all factors that we associate with a property market that is geared for higher house prices.

This guide will give you an understanding of the landscape of Auckland's property market, including the top 7 insights you should know.

Long Term House Prices

1. Auckland House Prices Have Increased By 6.3% Annually Over The Last 10 Years ...

Auckland homeowners have done very well over time. Between Sept 2014 and Sept 2019, the median Auckland house price grew by $228,000 (from $620,000 to $848,000). This is a 6.46% average annual increase.

This is similar to the 10 year period (Sept 2009 - Sept 2019), where the median Auckland house price increased from $460,000. This is a 6.3% average annual growth rate.

Auckland House Prices Graph squashed

Over the last 10 years, the national median house price increased by 5.52% annually.

Key takeaway: Over the long term Auckland tends to grow at a faster rate than the national median.

Short Term House Prices

2. But, Auckland House Prices Are Currently Flat, Though Are Increasing Elsewhere

Auckland's median house price has declined by $52,000 since its March 2017 peak (up until September 2019), when the median house price was $900,000.

While over the long term, Auckland house prices have outpaced those of other regions, recently Auckland's house price growth has slowed. Some of New Zealand's other regions, meanwhile, have experienced astronomical growth.

Over the last 5 years, the national median house price has grown at 7.3% annually, while Auckland's has been up 6.3%.

And over the last 12 months (September 2018 - September 2019), Auckland house prices have decreased by 0.4% ($4,000), and the national median (excluding Auckland) is up by 6.8%.

The reason for this is likely the difference in how property cycles move around the country.

Key takeaway: Right now, the Auckland property market is flat, while other regions are increasing.

House Prices By Suburb

3. House Prices Increases Range From 4.87% - 9.45% Based on Suburb

The median house price in Auckland grew at 7.25% between Jan 2000 and Aug 2018 ($230,000 to $850,000).

However, house price growth varied widely in different suburbs.

Within that period, the median property in Point Chevalier grew at 9.45% – the fastest in the Auckland region.

These houses grew in value from $275,900 to $1,488,600 – meaning that Point Chevalier homeowners earned $1,212,700 within the period. That is almost $65,000 a year, which is higher than the median income.

The slowest growing suburb was Auckland Central, which grew at 4.87%, from $222,400 to $540,500. That's a total of $318,100 just over $17,000 a year.

The other suburbs that grew the fastest were:

Fastest Growing Suburbs squashed


The suburbs that grew the slowest were:

Slowest Growing Suburbs squashed

Key takeaway: While Auckland's median property prices grew at 7.25% annually over the period, the actual growth achieved differs widely depending on the suburb your property is located in.

Auckland Rents

4. Auckland Rents Haven't Kept Up With House Prices, But They Are Following The Property Market

The median rent in Auckland is relatively sluggish – similar to property prices.

The median rent for a 3 bedroom house in Auckland is currently $630 (October 31st). This is $30 less than the year previously (where the median rent was $660), and $10 up from 2 years prior (where the median rent was $650).

Prior to this flat period, rents steadily increased. In October 2009, the median rent was $440, which increased to $540 by October 2014, and then to $630 currently. Over a 10-year period, rents increased by 3.65% annually – about half the growth rate of house prices.

The median rent for a 2 bedroom flat in Auckland is currently $495 (October 31st), this is $15 more than the year previously (where the median rent was $480), and $35 up from 2 years prior (where the median rent was $460).

Between March 2008 and January 2011 the median rent hovered around $310 per week. However, since that time, the median has increased by 5.3% per year (Jan 2011 - Jan 2019).

Over a 10 year period (Oct 2009 - Oct 2019) the median rent on a 2 bedroom flat increased from $315 to $495 – $180. This is a 4.62% 10 year growth rate.

This suggests that the rent on a 2 bedroom flat in Auckland is growing at a faster rate than the rent of a 3 bedroom house.

Key takeaway: The median rent for 2 bedroom flats is growing faster than for 3 bedroom houses

Auckland's Rental Yields

5. Auckland's Gross Median Yields Are 3.3%

Auckland typically achieves a lower yield compared to other areas in the country.

The median gross yield across the country is currently 3.9%, whereas the median three-bedroom home in Auckland achieves a 3.3% gross yield.

This can also be broken down into regions.

  • Auckland metro – 3.3% gross yield
  • North shore – 3.3% gross yield
  • Waitakere – 3.6% gross yield
  • Auckland – 3.5% gross yield
  • Manukau – 3.4% gross yield
Demand For Housing

6. Demand for Auckland properties is increasing

Auckland is the fastest growing city in New Zealand. Between the year 2000 and 2019, Auckland welcomed over 350,000 additional residents to the city. That's the equivalent population of Christchurch.

This same number of residents are expected to move the city, but, over the next 9 years.

Over the next 20 years (2018-2038), Auckland's population is expected to grow by 30.75%, about 523,800 people.

The growing population adds demand to Auckland's property market, which is expected to have an upwards pressure on property prices.

Of all the regions, Auckland region has the highest forecasted population growth, both in percentage and absolute terms:

Projected-Population-Increases-V2
Auckland's Housing Supply

7. Housing Supply is Constrained

Auckland's geography

Auckland's central city was built on an isthmus – a narrow piece of land with seas on either side. This means that the city has limited land in the central city to build additional houses on.

While a city like Hamilton or Christchurch can expand in any direction (like a circle), Auckland can only expand north or south. High commute times and traffic make inner city properties more attractive, which increases demand and pushes prices up.

City Council Debt
Auckland Council has a self-imposed debt ceiling of 275% of annual rates. They are currently nearing 270%. This means there is little room for the Auckland Council to borrow to fund new infrastructure. This limits green fields developments and constrains supply. The majority of the new houses for the additional 523,000 people will need to be within the city’s current limits.

Summary

Based On Our Forecasts, Auckland Is Still a Great Place to Buy and Invest In

If you're weighing up whether to buy or invest in Auckland – and your decision is primarily based on what that property might be worth in the long term – then we would suggest that Auckland is still a great place to buy and invest.

Supply is constrained, demand is predicted to be strong. For investors, there is strong growth – and little fluctuation – in rents.

The most important question to then ask is: "which suburb should I buy in?" This is crucial because, as we've seen above, there can be significant differences between suburbs in regards to long term house price increases.

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