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Looking to move back to Auckland? Entering a new property market can be daunting. We were able to speak with Barfoot & Thompson Managing Director, Peter Thompson to get his thoughts as to where the property market in Auckland has been and where it is headed next.

Auckland, New Zealand

What has been your experience of the Auckland housing market over the past 10 years?
A combination of the market hitting its price ceiling and the easing of the loan to value restrictions ratio by the Reserve Bank brought a 10-year cycle of accessibility to housing to a close. Over the last couple of years, house prices cooled off significantly in Auckland. It is considered a buyer’s market in the city with figures showing the average asking price down almost $100,000 since a high three years ago. As we kick off 2020, the housing market enters a new growth cycle with the highest number of sales being recorded in a January for four years as well as active buyers across all price segments prepared to pay near-record prices.

If I reflect on what occurred between 2008 and 2017 (in Auckland’s case) we experienced a period of rapid price increases and high turnover (also experienced at the same time in countries with similar economies to ours). This was further compounded in our case by a rapidly rising population coming on the back of a decade of under-investment in housing.

A core contributor was the ready availability of low interest mortgage money. Even today, mortgage interest rates are the lowest ever offered.

During the peak period of 2013 to 2018, the percentage of homes that changed hands more than once in six months was 9%, while 75% changed hands only once in that five-year period. What the data highlights is that as prices rose, a great number of people made the decision to trade up to the next level before that next level got out of their reach while another group made the decision to become long-term investors

Where do you believe the housing market is heading?
The market is shifting, with buying and selling activity picking up again in 2020. Recent sales prices, a lessening of turnover, and decreases in time it takes to sell signals an upturn in house prices. Most telling is the lack of listings - increasing demand with fewer properties available means increases in price. This shortfall in the housing supply is outpacing Auckland’s housing construction, which could see prices increase in the future.

What are the most up and coming areas for property investment?
We see an increased supply of apartments coming to the Auckland market by the end of this year, or early next, as the big construction pipeline that started three years ago finally completes. We also expect a different generation of buyers who will be interested in the city fringe developments – places such as Millwater and Silverdale are pretty much all sold, the new Milldale development bringing on another 14,000 sections. In the south, Flatbush and Ormiston are expecting 5,000 new sections.

What would be your advice for those looking to enter the Auckland property market?
For those considering a move, now might be the time to get the ball rolling. The recent increases in house prices will naturally bring previously reluctant sellers back into the market. In addition, the recent drop in interest rates will surely bring more first home buyers into the market and soon, investors who were in a “wait and see period” will start to buy and sell as they will have more equity due property prices going up. These two conditions could trigger the market further towards higher prices, so the time is now.

Barfoot & Thompson is a family-owned real estate company that has been in business for almost a hundred years. With one out of every three homes in the Auckland region being sold by Barfoot & Thompson, they are up to date with market trends and cycles. For more information about the Auckland market and Barfoot & Thompson click here.

Are you a Kiwi building a business overseas? Kea can help. We can provide personalised introductions to industry leaders for insights and advice. For more information, check out our Kea Connect service.
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Part 12