Has Auckland’s real estate reach a new peak?
Has property in Auckland reached its price limit? Certainly it seems the market is taking a breather with average prices having risen by just 0.6 per cent since May, according to Peter Thompson.
The managing director of Barfoot & Thompson writes in Monday’s special Property Report that the key reason for a slowdown in the rampant weekly escalation of prices we have all seen is that buyers have “reached the conclusion that at current prices the market is fully priced”.
And with some people stretching themselves to borrow half a million dollars for a modest home, one can easily understand why the market may have reached its peak.
But that doesn’t mean it has slowed, as property has been changing hands at a good rate during winter. And with summer on the horizon, expect the market to ramp up again, driven in equal parts by strong immigration, a shortage of good quality housing and low interest rates.
BNZ economist Tony Alexander says in his Sporadic report for August 17 that while he would be “happy” to maintain or increase his holdings in Auckland, easy gains in the city have “probably already been made”. So where are investors to go?
He writes that the next five years should see property price gains in Wellington, Hamilton, Tauranga “and a tad in Nelson”. But not Manawatu or Wanganui “because when times get tough [the] ability to liquidate assets becomes very constrained”.
Alexander expects to see Wellington being promoted as a good place to live as it offers “the ability to buy a reasonably priced house to raise a family”.
He also points to the benefits of the Transmission Gully Motorway, the capital’s IT and film sectors.
According to Statistics NZ there were 2824 new dwellings consented nationally in July, that’s up 24 per cent compared with July 2014. Of those, 1116 were in Auckland. It is the highest number of new dwellings consented in a month since March 2005 with apartments and townhouses, flats and units helping to swell the figure.