What’s Going On in the Auckland Property Market?

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The housing market in the Auckland area has seen significant price increases in the recent past, but shifting trends and new regulations may be changing this pattern. Homeowners looking to sell and buyers seeking new properties need to be aware of how the current state of the market may affect prices, interest, availability and the loan process.

Current Property Trends

Until recently, housing prices in Auckland were climbing at a steady, sometimes alarming, rate. Current statistics, however, show this trend slowing or even leveling out, an encouraging change for those wishing to purchase or invest in property. As of July, the media price of a home was $840,000, and price increases in general stand at 5.3 percent compared to 17.4 percent at the same time last year. Properties located in rural and central Auckland tend to be cheaper than those in the suburbs, but property sales everywhere are dropping regardless of price. Overall, prices have fallen to about two percent below the average over the past three months.

Updated Deposit Requirements

New requirements and restrictions may bring property prices even lower over time. In an effort to curb the rise, the government announced updated regulations for investors:

  • Investors obtaining bank loans will be required to put down a 40 percent deposit, representing an increase of 10 percent over previous requirements.
  • Owner-occupier deposits remain at 20 percent.

Tougher lending limits and investor limitations are aimed at getting property prices under control, making home buying more affordable and minimizing demand in a market where supply remains low. At the time of writing property management broker, SelectaPropertyManager.co.nz, say they have not seen any drop in interest from investors though it is expected that changes will take some time to flow through to the market.

Offshore Investors: Changing the Game?

Recently leaked information shows a surprising number of Chinese investors and property owners in Auckland. According to 2013 census data, Chinese citizens make up about nine percent of the population, but the housing figures show 39.5 percent of property transactions originating from Chinese buyers. The numbers increase with the price brackets, hitting as much as 50 percent for properties priced at or over $1 million.

Some industry insiders say this suggests not all of the buyers and investors are residents or citizens. However, since the information was obtained without a clear way to assess the demographics of the original realtor’s client base, it’s not possible to prove the exact origin of the Chinese investments. If the majority of investors turn out to be from overseas, new regulations may need to be put in place to prevent housing prices from climbing even higher.

Industry Insights

As of early 2016, factors dictating the influence of owner-occupier activities on the Auckland housing market remained mostly unchanged. Investors, on the other hand, are continuing to exert power over the market not only in Auckland but also in surrounding areas. Even as investor activities are expanding, residents are beginning to look elsewhere for more affordable housing.

A sharp drop of 24.5 percent in property availability also has a strong effect on pricing. With fewer new builds and a continued increase in demands, more people are competing for less space. This could prevent further price drops until more properties appear on the market.

For buyers, sellers and investors, the apparent stabilization of the Auckland housing market may have a significant impact. Whether prices continue to level out or begin to increase again will dictate the number of interested buyers, the ability of homeowners to sell their properties and the willingness of banks to extend loans. Realtors and loan advisors can provide guidance in complying with new rules and navigating the changing market.

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