The number of Auckland suburbs with an average property value of less than $1 million has more than doubled in the last 12 months, providing more buying opportunities for first-home buyers in New Zealand's most unaffordable housing market.
OneRoof analysis of price changes shows 40 suburbs around the city where houses are within reach of buyers who were locked out at the peak of the market.
The downturn, which has seen Auckland's average property values slide by more than 14% year-on-year, has pulled back prices in suburbs that were inflated by more 40% during the boom.
Twenty-three of the suburbs now within reach of first-home buyers had an average property value of more than $1m a year ago, and are now sitting just above their value in March 2021.
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The biggest year-on-year price drops were in Westgate, which is down from $1.2m to $944,000; Kelston, down from $1.15m to $909,000; Kawau Island, down from $1.1m to $869,000; and Manurewa East, down from $922,000 to $721,000.
According to the analysis, the suburbs with the lowest average property value are Auckland Central ($602,000), Manukau ($632,000), and Grafton ($670,000). All three are apartment-heavy.
The largest concentration of suburbs where the average property value dropped below $1m is in South Auckland. Among the 11 suburbs identified are Clover Park, Manurewa, Favona, Papatoetoe, Mangere East, Mangere, Manukau Heads, Takanini, Hill Park, Rosehill, and Pukekohe.
Eight suburbs on the western ring of the city - New Lynn, Ranui, Sunnyvale, Kelston, Glendene, Te Atatu South and Westgate - also dropped below $1m.
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James Wilson, head of valuations at OneRoof's data partner, Valocity, said that the collapse of the development market in the city had hit values hard in some of the areas.
During the boom, developers were paying above market rates for sections that could be turned into townhouses or apartments. However, the increased cost of borrowing, coupled with the spike in building costs and market slowdown, had put the squeeze on developer and investor margins.
“Developers have basically gone. Their absence at auctions has allowed first-home buyers to fill the gap in the southern and western rings of the city,” Wilson said.
However, first-home buyers aren't prepared - or able - to pay the premium developers had been paying. “They are buying them with no intent to develop. That reflects a very different price point,” he said.
Valocity head of valuations James Wilson says developers have left the market. Photo / Fiona Goodall
South Auckland-based Harcourts business owner Harsimran Singh noted that first-home buyers in his patch were growing in confidence. “They [are] accustomed to where we are now with prices and interest rates, and recognise there are good buys out there.”
Harcourts agent Teide Grice, who operates in the city's north-west, said price changes were helping buyers but finance was still a hurdle. “They’re still fighting the banks, so we still see a lot of deals that are taking longer to get over the line than they previously would have,” she said.
Some vendors were struggling to accept the changes in the market, but she noted that some buyers had unrealistic expectations around price. “Vendors are still holding on because they think their property is worth more but buyers are going, ‘Oh well, you know that market is going down, so it’s only worth this much’. Well yes guys, the market is going down, but it’s not going down that much. You’re going to get a four-bedroom property in the seven hundreds range.”
She said there was definitely more positivity in the market, and good interest rate deals were helping.
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