Homeowners in Auckland’s northern suburbs and western fringes, who bought at the peak of the market, face an increased risk of selling at a loss, according to new research by OneRoof.co.nz.
Some suburbs have seen their median sale price drop by up to seven percent since April 2016, while several others have seen no growth at all, suggesting the slowdown in Auckland’s property market has hit some areas harder than others
OneRoof.co.nz and its data partner Valocity looked at current Auckland house sale prices and compared them to the figures recorded three years ago. In that time period, two suburbs – Kumeu and Chatswood – recorded negative growth, while eight others registered no growth or marginal growth in the median sale price.
These included Sunnynook, Albany Heights, Narrow Neck, Rothesay Bay, Birkenhead, Murrays Bay, Castor Bay and Devonport.
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OneRoof.co.nz editor Owen Vaughan says: “The dip in median sale price need not alarm every homeowner in these suburbs but it should be of concern to those who bought at the height of the market. The numbers suggest that they may lose up $100,000 on their investment if they were forced to sell now.”
James Wilson, Valocity head of valuation and innovation, adds: “While there are only a few suburbs which have dipped below their 2016 value levels, many have only experienced a small amount of growth since this time.
“When you factor in the cost of ownership during this time, there will be many homeowners with very little equity growth in their properties to fall back on.”
The softening in the North Shore doesn’t surprise John Bolton of Squirrel. He sees the area’s lack of growth as evidence of the softening of foreign buyer demand.
“During the boom, they [foreign buyers] were right there, especially in Westlake and Takapuna school zones, but now the change in rules has hit pretty hard,” he says.
“The North Shore benefited the most when prices were on the way up, and that attracted foreign buyers. But now they’re softening, more people are stepping away.”
The analysis of the figures by OneRoof.co.nz and Valocity show big price gains in suburbs on the further reaches of Auckland and on Waiheke Island.
Waiotaki Bay leads the pack, showing a 34 percent increase in the median sale price since April 2016. Dairy Flat and Oneroa are not far behind, with their median sale prices up 33 and 32 percent respectively.
Vaughan says: “If you can’t afford inner-city suburbs like Ponsonby and Grey Lynn, then a place with regular public transport becomes more appealing, Waiheke has lower prices, the beachside holiday lifestyle, but is only 35 minutes from downtown by ferry.”
The catch-up at play in the fringe suburbs shows that these places have finally come into their own.
“The surge in prices in the city’s north western edges reflects the growing suburbanisation of former farm and lifestyle places like Dairy Flat, Kaukapakapa and Waimauku, and improved infrastructure and transport links to both city and airport/south,” Vaughan says.
Wilson says that with interest rates continuing at historically low levels there is not the financial pressure to sell.
“People are just selling to upsize or downsize. So if the price isn’t there, the vendor just goes ‘I don’t want to sell’,” he says.
He also notes that Auckland market doesn’t have the same downward pulling trends as Sydney or Melbourne, where banks have become cautious about lending and too much stock hit the market at once.
“Banks are still lending and supporting the market, and, as it turns out, we didn’t have the reliance on foreign buyers to support the market that some people said we did.
“That means that in good areas, if you had to sell now then you won’t be taking a loss.”
The analysis by OneRoof.co.nz comes as REINZ figures show a 2.7 percent drop in Auckland’s median sale price in the year to April 2019 to $856,000, and an 18.2 percent drop in sale numbers, from 2,451 to 2,006 – the lowest for the month of March since 2008.
Fewer properties selling for over $2 million (down from eight percent of the market last year to only 5.5 percent this year) partly explains Auckland’s median price drop.
REINZ chief executive Bindi Norwell says: "The median price has just continued to hover around the $850,000 mark – the same thing we’ve seen for nearly three years now suggesting that perhaps the Auckland market has found its ‘new normal’ for the time being.”
