Property prices in Auckland continue to break records, with homes now 56 percent less affordable in the city than they are in the rest of New Zealand. With the gap between Auckland and the rest of the country widening, the two-speed market of recent years looks set to continue. Despite rising prices and fewer building consents last month, however, there is some good news on the horizon for first home buyers. The Auckland Housing Accord has already approved 16,734 new dwellings, with a total of 86 Special Housing Areas (SHAs) to be approved for the next few years.
According to the latest Massey University Home Affordability Report, home affordability in Auckland declined by 10.2 percent between March and May, with a 25 percent decline recorded over the previous 12 months. This sharp decline is in stark contrast to the rest of the country, with eight of the country's 12 regions showing affordability improvements over the quarter. Affordability decreased nationwide by 5.4 percent over the quarter and 11.3 percent over the year, however, highlighting the significance of Auckland's results on the national data.
The average residential property price in Auckland has increased by $130,950 to $834,300 over the last year, with the average asking price outside Auckland increasing just $13,950 to $404,550. The gulf between Auckland and the rest of the country continues to widen, with the difference between markets reaching record levels for the second consecutive quarter. According to Massey University senior property lecturer Dr Susan Flint-Hartle, “House prices increased in all four of the regions that showed affordability declines… But Auckland stands out because its average house price increased by $74,000 over the quarter.”
A recent fall in building consents has helped to influence these figures, with the number of new consents in Auckland falling to just 651 in May according to data from Statistics New Zealand. This was a significant drop from 912 dwelling consents in April and 756 in March, with apartments, townhouses and units seeing the biggest drop from 525 in April to just 207 in May.
Despite the recent fall in building consents, the homebuilding industry continues to shift from Canterbury to Auckland, with 86 new SHAs approved for the city and more on the horizon. According to New Zealand Mortgages & Securities director James Kellow, this will make a huge difference to supply levels over the next decade, which in turn will have a big effect on prices. The last two approved SHAs will deliver 1,800 new houses alone, with all 86 SHAs having the combined potential to yield up to 45,000 new houses.
“However, we’re away now and over the next 18 months we will see bricks and mortar sprouting like grass." said Kellow, adding “The forthcoming earthworks season starts on 1 October and I predict it will be the busiest in terms of actual sections created.” The government has also instigated a wider program of work to increase investment and constrain building costs, with Kellow saying "We remain committed to supporting this momentum and will continue with our programme to grow the supply of housing.”