It’s been a dizzying race to the top for Auckland’s housing market. How high can it go?
Only a few years ago, owning a million-dollar home would have been a dream for most people. But over the past three years, residential property values have shot up by 46%.
Despite a slight dip in the latest price growth results, a house in Auckland will now set you back around the $1 million mark … and that’s just an average dwelling. Most family homes close to the CBD in the desirable inner eastern and western suburbs will set you back a lot more; and for the most exclusive suburbs, breaking the $3 million-average barrier will be the next big milestone.
Sitting at the top of the list of the most expensive areas are: Herne Bay, Remuera, Orakei and Campbells Bay. During 2017, these suburbs each recorded an average sale price of over $2 million, according to REINZ data.
At No.1 sits Herne Bay – the area’s beautiful character villas and prime location come with the country’s largest average price tag, just under $2.5 million (77 sales for 2017). Not far behind is Remuera, with an average value of $2.3 million – a big number matched by equally impressive sales volumes: 419 sales over the past year. Then comes Orakei at $2.1m (69 sales) and Campbells Bay – the only North Shore member of the club – with an average price of $2.06 million (49 sales).
While the rise of these suburbs from the $1 million to $2 million average has taken under a decade, the climb to the $3 million mark will be a slower process. After years of steep price increases and frenetic investor speculation, Auckland’s residential market is taking a well-earned rest.
A sense of equilibrium has descended on the “City of Sales”; listings are up and prices are levelling; with the REINZ Housing Price Index showing a modest 1% year on year growth, and are likely to remain steady. So it’s going to be a while before we welcome our first $3 million suburb. Herne Bay needs its average prices to rise over 22% for that to occur, which is unlikely to happen quickly in today’s less febrile market, but as history shows, it will happen.
The $2 million club
However, while $3 million prices remain elusive, the $2 million club is set to expand its membership. A number of suburbs – stretching from Auckland’s northern beaches to southern bays – only need to experience modest price growth for them to hit the multi-million dollar benchmark.
Closest to the $2 million average is Omaha, where property prices have been given a boost due to the sale of luxury holiday homes. The average price for a sea view there will set you back a cool $1.94 million, at the time of writing.
In the city, Epsom’s average sits at $1.9 million – helped, in part, by those three magic words: Double Grammar Zone – and its central location.
From there, the $1.8 million zone stretches from St Heliers ($1.89 million) in the east, to trendy Westmere ($1.87 million), taking in Mission Bay ($1.84 million) and St Marys Bay ($1.82 million), along the way.
Other stars of the eastern suburbs include Glendowie, with an average sale price of $1.8 million, and Kohimarama ($1.74 million). Pushing further east, Mellons Bay ($1.72 million) – with its desirable schools, northerly aspect and great beaches – just pips the North Shore’s Devonport, which has an average sale price of $1.71 million.
The only way is up
Inevitably, given inflation, steady population growth and Auckland’s housing shortfall, all house prices in our largest city will continue to rise … just at a more sedate pace.
But there are also other forces at work that will have a major influence on average prices. The Unitary Plan has had a big effect on property valuations, and its push for higher density living in some areas will skew average sale prices.
For example, beachfront Omaha has a limited supply of properties (48 were sold last year); undeveloped sections are few and far between – only two were sold in 2017 – and they carry a hefty premium. Epsom, in comparison, is undergoing turbo-charged intensification and already boasts a high number of property transactions (212 in 2017).
Just one or two big sales in Omaha will be enough to boost its average sale price the 3.3% it needs to break into the $2 million club. Whereas in central Auckland, increased sales of smaller units and apartments will dampen average price rises in some areas.
However at the top of the ladder – in the top four priciest suburbs – intensification isn’t likely to stop the steady climb to the $3 million mark.
Already there are a significant number of sales pushing the $3 million barrier. Last year over a quarter of all sales in Herne Bay were over $3 million, and for Remuera it was just under 20%.
Indeed, in March, 15 Cremorne Street, Herne Bay, sold for close to $30 million. Proving that when it comes to hot property in desirable locations, the cream, like the prices, will always rise.