Since 2017, Auckland’s property market has softened with both prices and buyer demand decreasing.
However, recent data shows that Auckland may have reached a turning point and prices are increasing once again. Is this the beginning of the next boom?
Auckland’s slow recovery
In October, Auckland’s average property price was higher than it had been for 19 months at $868,000, according to the Real Estate Institute of New Zealand (REINZ). This comes after a small 0.8% increase in the average price over the previous 12 months.
The data also tells us that Auckland property is selling slightly faster than it was last year: 35 days instead of 36 on average. Bindi Norwell, the REINZ CEO says that the Auckland market is showing good signs:
“Anecdotally, we are seeing positive activity from first home buyers, and good interest from investors. Some open homes have had 50+ groups through in their first weekend, especially with listings in the sub $1,500,000 price range. There are a good number of new developments coming to the market in the Eastern and South Auckland suburbs.”
Price growth forecast for 2020
Westpac recently predicted that Auckland’s market would see prices increase by 7% or more during 2020, thanks to the cancellation of the capital gains tax and record low interest rates. This would push the average price in the city to a new record high.
ASB are more measured in their predictions, expecting 0.5% and 1% price increases in Auckland during 2020 and 2021, respectively.
The Bank’s Home Economics newsletter suggests that there are several factors holding the Auckland market back:
“Housing policies targeting investor demand are acting as handbrakes on those parts of the market that previously featured a large investor component, like Auckland and Queenstown. We expect these regions to underperform the national average. Second, broader economic activity and population growth have slowed a little and are expected to slow further.”
On a positive note, ASB also stated that housing supply appeared to be catching up to demand:
From late 2020, we expect the housing upswing to top out as this additional supply gradually reduces the national housing shortage.
Unfortunately, it’s impossible to accurately predict the Auckland property market, and while we could see an 7+% price increase in 2020, we may instead see prices hold steady. One thing that is clear, however, is that the Auckland market is no longer softening and now could be a great time to buy property.
