Opinion: Auckland market cooling, but expect a new trends

By Geoff Barnett, National Manager, Century 21 New Zealand The latest REINZ data supports Australia & New Zealand Century 21 owner and chairman Charles Tarbey’s recent observation that the property market is returning to 'true real estate’ after the last few years of strong growth and huge demand. In Auckland, in particular, we’re generally seeing new residential listings and sales volumes down, auction clearance numbers generally falling, average selling times lengthening out, and median house prices not rising as steeply. However this was always inevitable and in fact is a lot more realistic and sustainable. I believe 2016 will still be relatively strong across New Zealand when you consider the regions are performing well, interest rates remain low, and Auckland’s relentless population growth continues. Rest assured as Australasia’s fastest growing city, Auckland will keep trucking along. Not surprisingly things eased back in the last quarter of 2015 as overseas buyers were hit with the new Government and Reserve Bank restrictions aimed at slowing down foreign investors in Auckland. But as we know people soon get used to new rules and just work with them. Our capital city Wellington’s now doing better as is the property market in many of the regions. However I think the New Zealand story for 2016 will be more Kiwis buying apartments as their first home option. Most apartments offer a more affordable entry point. While at the same time the quality of construction and the overall living environment has improved dramatically in many of the new apartment developments now coming on stream. It has been a long time coming but the cranes are back in business. Nearly two decades ago New Zealand’s leaky building crisis shook significance confidence out of apartment and town house sector and then the Global Financial Crisis saw new builds disappear from our cities skylines. However a return of confidence and more assurance of quality is now also seeing our retail banks willing to lend on apartments. Another aspect to expect in the New Zealand property market this year will be seeing more renters coming into the market, helped by our retail banks positively responding to the Reserve Bank’s cuts to the official cash rate. With the average weekly rent across the Auckland region now in excess of $500 and some interest rates falling below 4.5%, many renters will contemplate becoming buyers and for some when they do their sums it makes more sense. Subsequently we’re seeing more young couples and single people in particular coming into the Auckland housing market again which we haven’t seen for a while. Admittedly, some are having to leave there more central rentals to buy further out. However it seems many are now more willing to accept a long commute if it gets them on the property ladder. For Century 21’s offices in peripheral Auckland, they’ll tell you for free that more ‘city kids’ are coming out every day. So overall, we’re expecting a strong but not exceptional 2016 in the New Zealand property market. Consumer confidence seems to be holding, but the all-important dairy sector remains sluggish and international economic concerns are always a worry for our export-dependent nation. One thing’s for sure, all eyes will be on Reserve Bank as to what happens to the Official Cash Rate at the end of this month.