New Zealand home owners wanting to live in an ‘international’ city should brace themselves to pay ‘international’ prices for property, according to new real estate data.
A world-wide comparison has found Auckland is now matched with the likes of Sydney, Vancouver, San Francisco and Stockholm when it comes to the most preferred places to live - and its house prices are growing correspondingly.
Market analysis compiled by Bayleys Research and global surveys have shown New Zealand as a country and Auckland as a city have fast become part of a select group deemed the most liveable places in the world.
This year, Auckland was ranked ninth most liveable city in the world and ninth for the world’s friendliest city, according to the Economist Intelligence Unit 2015 ‘Worlds Most Liveable City 2015’.
At a national level New Zealand was also voted third most creative country in the Martin Prosperity Institute 2015 ‘Global Creativity Index 2015’ and seventh most reputable in the Reputation Institute ‘Worlds Most Reputable Countries 2015’.
New Zealand was voted the second least corrupt country in the world by Transparency International in its latest survey and in the 2015 Global Peace Index, New Zealand came in at number four in the Institute for Economics and Peace ‘Global Peace Index 2015’.
Findings by Bayleys Research team mirror those of international surveys - showing New Zealand’s and Auckland’s increasing levels of desirability across a number of areas such as lifestyle and safety and schooling.
Other cities that rank highly in the surveys include Sydney, Vancouver and San Francisco, all of which are coastal cities similar to Auckland.
Bayleys Research manager Ian Little said: “Given the high levels of mobility and the fact that talented people can pick and choose where they want to live, New Zealand is clearly punching above its weight.”
A consequence of these high rankings however has been that Auckland has joined other sought-after cities in having the highest real estate values within their respective countries, said Mr Little.
“Not surprisingly all have also seen some of the highest levels of house price appreciation globally and are ranked some of the least affordable cities in the world, according to the Demographia Housing Affordability Survey 2015,” said Mr Little.
“Numerous mayors and civic leaders have long been espousing Auckland’s ambition to be a ‘global city’. In many cultural and business respects, Auckland is now a global city but that has come with a price.”
Latest figures from REINZ show house price growth in Auckland increased to 15 percent in the year to September 2015. This compares to 22 percent growth in Sydney over the same period, 19 percent in Vancouver, 15 percent in San Francisco and 15 percent in Stockholm.
“This is a simple case of local supply and demand factors generating price growth. However, escalating prices needed to be understood in context, said Mr Little.
“Rather than saying Auckland house prices are now ‘expensive’, another way of looking at the situation is to say that until around 2013, Auckland house prices were ‘cheap, on an international scale’ and they are now at a comparable level on the global playing field.
“If you want to attract world-class staff, they will want to live in world-class home and they’ll be prepared to pay world-prices.
“Interestingly there are many other parallels between Auckland and other leading cities, including concern about the impact of escalating house values. This has resulted in central banks and governments, in a number of countries, introducing policy responses, similar to those enacted by the Reserve Bank here in New Zealand, aimed at cooling housing markets.
“In the long run however, the attraction of ‘global cities’ including factors such as quality schooling, safety, the friendliness of locals, job prospects and a better all-round quality of life on offer will support ongoing strong demand for residential property.”
As a result, in Sydney due to the major banks having been ordered to limit increases in investor loans to 10 percent a year, investors are having to pay mortgage interest rates of approximately 0.85 percent more than owner occupiers.
In Canada, house buyers in Toronto and Vancouver are likely to see their minimum deposit amounts rise from 5 to 10 percent, while in Stockholm a minimum deposit of greater than 15 percent is being considered.
The strong price growth in Auckland has been evident for the past few years and Bayleys Research supports international findings that this pattern is expected to continue.
Statistics New Zealand anticipates Auckland’s population will continue to grow at almost double the national average for the next 20 years. By 2033 close to 40 percent of the country’s population is expected to live in the city, which in turn will put increasing pressure on house prices.
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