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MARKETBEAT: Eastern Suburbs Residential Report September 2016

Tags: Auckland Research Residential

The second quarter of 2016 witnessed the highest quarterly price increase in the Auckland residential market since 2014.

A short lived slowdown towards the end of 2015, a reaction to regulatory changes, was followed by a strong pick up in the first quarter of 2016. As market pressures have continued to increase over subsequent months, the second quarter experienced an even sharper surge. The regional median lifted by 7.5% in the June quarter reaching a new record of $837,000. Much of the price increase occurred in the last month of the quarter, resulting in additional measures being taken by the Reserve Bank, in an attempt to cool the investor market. The “Bank” announced that the existing lending restrictions, which require Auckland residential property investors to have at least a 30 per cent deposit have been further tightened with a 40 percent deposit now being required. In addition the restrictions will no longer be limited to Auckland properties only. The new regulations will take effect on 1 October 2016 although it is likely that the high street banks will begin implementing the new rules almost immediately. 

The overall Auckland market remains tight, with figures from indicating that the total inventory for sale in June was only 5,934 properties, a 1% fall, over the last 12 months, from 5,992 and 42% lower than the 8 year historic average of 10,160. The number of weeks to sell the inventory (based on current sales activity, assuming no further listings are taken on) are still on their lowest levels, with the June 2016 figure being 9.5 weeks, significantly lower than the historic 8 year average of 23 weeks. This tightening is also illustrated by the latest REINZ data, which shows an acceleration in the speed of sales in May and June, resulting in the average days on market figure falling to 32 days in June from its 36 days level in April.

Value changes, when analysed at suburb level, are more volatile than regional movements given the smaller number of sales. Over the Eastern suburbs a strong lift in values was noted in the opening quarter of the year, when a record three month lift of 14.2% was recorded by REINZ, followed by a dip in values over the June Quarter. Over the opening half of the year however, the local area median has lifted by 12.3%, compared with 10.1% for the Auckland region as a whole, reaching $1,475, more.

Spotlight on Orakei

Orakei’s proximity to the coast and the CBD, the latter being just five kilometres to the west, has seen the suburb’s real estate experiencing high levels of demand. As a result, values have lifted sharply over recent years making Orakei one of the region’s highest value suburbs. Orakei is home to some of the population’s most affluent people. Consequently there has been particular pressure placed on the upper part of the suburb’s value illustrated in the graph below which shows figures for the top 15% of the more.

Spotlight on Epsom

As one of the most exclusive and affluent suburbs of Auckland, Epsom is located five km south of the city centre between Mount Eden and One Tree Hill. The area benefits from easy access to a number of attractive parks and reserves while also being ringed with Mount Eden Domain on the west and Cornwall Park and One Tree Hill Domain on the east. Epsom has long been viewed as an aspirational location in which to live in, given its amenities, proximity to CBD and excellent more.

Read the full Marketbeat article here.

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