With million-dollar suburbs in Auckland now commonplace, and $2-million suburbs not unusual, what are the chances of Auckland suburbs breaking the $3 million barrier?
Bayleys head of research Ian Little says massive growth in residential property values in Auckland over the last three years means there are several suburbs with a shot of hitting $3 million.
"Despite a slight dip in the latest price growth results, the average house in Auckland now sets buyers back around the $1 million," he says.
"Most family homes close to the CBD in the desirable inner eastern and western suburbs will set buyers back a lot more. For the most exclusive suburbs, breaking the $3 million-average barrier will be the next big milestone.
Start your property search
"Sitting at the top of the list of the most expensive suburbs in Auckland are Herne Bay, Remuera, Orakei and Campbells Bay, each of which recorded an average sale price of more than $2 million last year."
Herne Bay, which saw 77 sales last year, has the country’s largest average price tag, at just under $2.5 million.
"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," Mr Little says.
"Next is Orakei, which saw 69 sales last year and has an average value of $2.1 million. Campbells Bay – the only North Shore member of the $2 million club – has an average price of $2.06 million and saw 49 sales last year."
Mr Little says that while the rise of these suburbs from the $1 million to $2 million average took less than a decade, the climb to the $3 million mark will be slower.
"After years of steep price increases, Auckland’s residential market is slowing down. Prices are levelling, 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 by more than 22 percent for that to occur, which is unlikely to happen quickly in today’s less febrile market, but as history shows, it will happen."
Mr Little says that 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," he says.
"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."
Inevitably, given inflation, steady population growth and Auckland’s housing shortfall, Auckland house prices will continue to rise.
But there are also other forces at work that will have a major influence on average prices, Mr Little says.
"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 intensification and already boasts a high number of property transactions (212 in 2017)," Mr Little says.
"Just one or two big sales in Omaha will be enough to boost its average sale price the 3.3 percent 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 percent. Indeed, in March, 15 Cremorne Street, Herne Bay, sold for close to $30 million."
Outside of Auckland, $1 million-plus suburbs are rare but price trends suggest there will be more of them soon.
Mr Little says: "Aside from three Wellington city suburbs and one suburb in Christchurch, Queenstown-Lakes District is the only other place in New Zealand with $1 million plus averages, and the halo effect has also been felt in nearby Arrowtown (at $1,366,295 on 77 sales over the past 12 months), Lake Hayes (at $1,195,458 on 56 sales) and Wanaka too (at $1,108,797 on 228 sales).
"Do they represent a good opportunity to buy and benefit from a healthy capital gain? Certainly, if lifestyle factors are the motivation for any house purchase, the up-and-coming suburbs will tick that box, too. There’s a commonality across many of them – beaches, sea or lake views, and good access to outdoor experiences."
The first suburbs nudging the million-dollar mark are in Tauranga:
• Mt Manganui at $885,662
• Bethlehem at $872,677
• Omokoroa at $861,853
Mr Little says: "If the annual median price rise for the Bay of Plenty for the past year of 10.1 percent is applied to the year ahead, those three areas may not reach the $1 million mark by next summer, but with growth predicted to continue, it could well be the summer after."
Classic holiday spots also feature strongly in the next wave of areas close to the million-dollar mark, Bayleys research shows, although some of these have become sought after as permanent residences:
• Russell in the Bay of Islands at $847,520
• Waihi Beach, in the western Bay of Plenty, at $828,010
• Mapua, near Nelson, at $813,659
• Mangawhai Heads, north of Auckland, at $794,830
• Lake Tekapo, in the South Island’s Mackenzie country, at $764,000
Mr Little says many of the regions experiencing strong growth have attracted working age families and retirees keen on an improved lifestyle. "But a key driver is also property affordability. Some city migrants may sell their modest Auckland three-bedroom house for $1 million and spend the same amount on a larger, better home in the regions," he says.
"But many home-hunters split the difference, choosing a better home close to schools, shops and amenities, but one that costs less than their city abode. They are probably not flocking to the pricier regional suburbs.
"So while regional hotspots like the Waikato, Whangarei and Hawke’s Bay have been growing, they are still some way off having million-dollar suburbs. The closest they get are Flagstaff in Hamilton, at $805,188; Whangarei Heads at $723,029; and Poraiti in Napier at $700,289."
