How Auckland saw plenty of drama but no action

Auckland's property market barely shifted in 2018, but behind the scenes there was a lot going on that could have an impact on future values: a foreign buyer ban, changes to the bright-line test, KiwiBuild and lots of talk about a capital gains tax and property market crashes. 
But you wouldn't see that in the figures for Auckland.

For many suburbs in the city, where they are now is where they were 12 months ago - give or take a percentage point or two - in median value.

Much of the growth in 2018 has been centred in and around fringe suburbs, such as Wellsford or Pukekohe, where there are more affordable properties, or in areas where there has been a significant amount of new build activity.

The dramatic surges that typified the city's market during the boom years have given way to softer conditions, characterised by plateauing levels of house price inflation and subdued activity.

The median value for all properties in the region currently sits at $821,000, less than one percent up on the same period last year. Of the city's territorial authorities, only Papakura and Auckland City experienced annual growth of above one percent.

For each property type - apartments, houses and lifestyle property - values have either stalled or slipped in value. The median sales price for Auckland apartments has stalled in the last 12 months and now sits at $631,500 (up slightly from $630,000 last year) while houses dropped 2.79 percent to $890,000 and lifestyle properties 2.33 percent to $1,318,000

Overall sales volumes dropped four percent on the same period last year. While the total dollar value of all properties sold in the 12 months to August 2018 looks impressive - $21,248,538,151 - it is down 13 percent on the same period the year before.

Who's buying has also changed. Investors' (three properties or more) share of new mortgage registrations in the city dropped from 17.8 percent in 2017 to 17.2 percent now. First-home buyers appear to be filling this void with their share of new mortgage registrations rising from 24.8 percent to 26.4 percent.

What does this mean for the city's property market in 2019?

Interest rates are low and are unlikely to increase in the next 12 months - in fact, they may even fall back a point or two. That will be a boost to buyer confidence, even if affordability still remains an issue. Supply is also an issue, and although KiwiBuild is up and running, it will be some time before it has an impact on the Auckland market.

Changes aimed at property investors - the extension to the bright-line test and new regulations governing rental properties - haven't resulted in their exodus or brought a flood of new stock to the market, although it may it make harder for renters to find a property.

The overseas buyer ban, enacted in October, has yet to have a material effect on the market. Next year’s figures will show just how much of impact foreigners have had in Auckland, but until then, it's wait and see.

The same applies to the nervousness on display in Australia. Talk of crash there has naturally led to talk of a crash in Auckland, but the market dynamics at play in Sydney and Melbourne are quite different to those in Auckland. New Zealand's economy would have to suffer a cataclysmic event for house prices in Auckland to suddenly drop 30 percent - and the data suggest that's not on the cards.

See the numbers and watch the video on OneRoof

OneRoofJustin Flitter