Property prices continue to rise in Auckland despite falls across the rest of the country. The two-speed New Zealand property market has never been so obvious, as the government look to increase housing supply and the Reserve Bank look for new ways to dampen demand. According to the latest figures from the Real Estate Institute of New Zealand (REINZ), the median house price in Auckland rose a massive 18 percent over the year while the national median price dropped 4.2 percent.
Just 12 months ago in April 2014 the median house price in Auckland was $611,500. It has grown $108,500 in the last year to reach its current figure of $720,000, a massive $265,000 more than the national median price of $455,000. To put things in perspective, median house prices in Auckland were $455,000 about five years ago. Prices have increased the most in North Shore, Outer Auckland and Rodney, with the median house price in North Shore now sitting at $925,000.
According to REINZ Chief Executive Colleen Milnhe, "the Auckland region continues to see strong demand from all types of property buyers and low levels of new listings. Vendor expectations are continuing to move higher across the region, with an increasing number of suburbs seeing the median price above $1 million." Sales volume also rose in Auckland by 25 percent, with a 53 percent rise in Rodney and a 44 percent rise in Outer Auckland leading the way together with strong figures in North Shore and Auckland City.
"Auckland continues to dominate the real estate market in terms of price movements. The strong price movements in Auckland, particularly on the North Shore and in Rodney, continue to be driven by high demand from all types of property buyers and from a lack of sufficient new supply - both new builds and listings of existing properties," said Milne, adding "New builds take time to be completed. Meanwhile the very low level of new listings suggests that potential vendors are considering factors other than just price in making the decision whether to sell their properties."
Surging prices are a result of both low supply levels and rising demand, with new LVR restrictions for Auckland property investors attempting to redress the balance. In sweeping measures aimed to slow house price inflation, Auckland rental property investors must have a deposit of at least 30 percent starting from October. According to Reserve Bank Governor Graeme Wheeler, “Auckland’s median house price is 60 percent above its 2008 level, and house prices in Auckland have been rising rapidly since late last year... This reflects ongoing supply constraints and increased demand, driven by record net immigration, low interest rates and increasing investor activity."
New lending restrictions will do little to address the housing shortage, however, something the Auckland Council and government need to work on together. According to Harcourts chief executive Hayden Duncan, this is the fundamental problem driving the Auckland market: "Ultimately, Auckland is suffering from a lack of housing... The demand and supply imbalance is so great that even if some property investors are removed from the equation, or choose to purchase outside of Auckland, there will be plenty of buyers to take their place."