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Auckland: The London of the South Pacific?

Auckland: The London of the South Pacific?

Our location at the bottom of the world often means that trends can take a little longer to hit our shores. This includes trends associated with our real estate market. Over the last year or so we have been bombarded with reports regarding the unaffordability of Auckland housing. There have been countless headlines about the fact that it is nearly impossible for the average kiwi family to enter the market. If we look to other real estate hot spots like London, Paris, New York and Sydney – this has been the predicament for decades. In these centres the average family gave up thinking they could afford their equivalent of the ‘kiwi half acre section’ long ago. But should Auckland’s population of one point four million justify its inclusion as one of the world’s least affordable cities?

Currently, Auckland’s housing market bears no relevance to what is happening around the rest of the country. Having such a large force operating as a separate market misrepresents national statistics and does not reflect the wider demand for real estate across the country. If the media were more concerned with the accuracy of its reporting, it would show a clear ‘us and them’ between Auckland and the rest of NZ. At some stage Auckland, like all markets, will experience a downturn but just when that might be is anyone’s guess. I wonder if anyone has decided to sue Bernard Hickey after he predicted a drop in the Auckland market by 30% in 2008?

Wellington residential real estate 2015

The year has started off with a lot more urgency than 2014 yet interest rates have remained steady. With the international drop in commodity prices and lower dairy milk pay outs, the Reserve Bank is unable to default to its preferred method of controlling the market by increasing interest rates. This means that for the short to medium term, buyers will be confident in their ability to service debt.

What is still noticeable in the local market is that buyers are reluctant to take on properties that have a large maintenance list while well-presented homes sell well. At this stage I would be expecting low to medium capital growth in Wellington over the next year.

Wellington property statistics

Average sale price 20132014
Northern suburbs$450,000$512,000
Central suburbs$440,000$480,000
Eastern suburbs$535,000$530,000
Western suburbs$550,000$590,000
Southern suburbs$509,800$510,000

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