With Auckland gearing up to welcome the winter and New Zealand’s housing market in the midst of a boom, the city is in a great position to land the next great home, writes Michael Roederer.
“The Auckland housing market is set to grow by nearly 10 per cent this year and the next year will see a big increase in home sales and prices,” he says.
“But that’s not all Auckland has in store for the next decade.”
The latest figures show a rise in home ownership to about 6.6 per cent, a new record high for Auckland, and a further rise in rental incomes.
“We’re heading for another big house boom and we’ve got some very big houses to sell,” Roedger says.
There’s a huge gap between what Aucklanders are spending on housing and the amount they can afford to pay.
“There’s no doubt the current housing boom is creating a bubble.
And we’re going to see another bubble in the years ahead,” he warns.
“So when the housing market does boom, people will be able to buy in Auckland.
That means the gap between Aucklanders and the market for housing will be growing and that will put pressure on the supply of homes.”
A housing bubble is nothing new, but the Auckland housing boom has been at the centre of the national debate.
It started in the mid-2000s when Aucklanders bought up large amounts of land in an attempt to build new houses.
“Aucklanders have a huge amount of land to sell but they don’t have the ability to pay as much as they should,” Roentgen says.
The boom in Auckland has also been driven by Aucklanders wanting to buy more than one home, which in turn has meant a large influx of new homes has come to the city.
“People are looking for one-off homes and they’re getting that with Auckland.
But they can’t buy that many houses in Auckland and that’s why they’re going up in price,” Roeder says.
This week the Reserve Bank announced a series of measures to help ease the housing supply crunch, including lowering the supply cap on housing purchases.
“At the same time, we’re also tightening the supply rules for buyers of new home purchases and we’re reducing the cap on the number of properties that can be built in Auckland,” the RBA said.
“This will help to reduce the supply gap in the market, so we expect house prices to rise.”
The Reserve Bank has been a vocal critic of Auckland’s housing affordability crisis, saying the Auckland market has “no clear consensus on where to look” to purchase a home.
The latest housing data is a key element in the RBNZ’s plan to ease supply in Auckland’s booming housing market.
The RBNz has been looking at how to cut supply and encourage the building of more housing, and it has identified Auckland’s two main areas of concern as the number and price of homes.
The number of homes in Auckland rose by about 9,000 in 2017 to 1,857,000, but it is forecast to rise by almost 20,000 by 2020 to 1.5 million.
In its 2017/2018 Housing Market Survey, the RNZ said it would focus on two areas, one of which was the number, and the other was the price of the homes.
“In the first half of the year, the number increase for Auckland was due to the number entering the market and increasing the price to make them more appealing to buyers.
In the second half of 2018, the price increase was due mostly to higher supply and a lower number of houses coming on the market,” the report said.
Auckland’s property market has been hit by an unprecedented wave of new house building, with more than 40,000 new homes being built in the past 12 months.
The price of houses in the city rose by more than 20 per cent between January and June.
The median sale price of a house in Auckland was $5.5m, up $1.2m on the same period in 2017.
The average selling price of new houses in New Zealand rose by 8.4 per cent in the same 12-month period to $2.4m.
This is largely due to higher demand for new homes from investors and a decrease in supply as prices are set to fall.
“When Auckland is on a house price boom, we don’t know how long the housing bubble will last,” Roede said.
But in the meantime, there is still plenty of supply to sell in Auckland, with prices in the CBD up 8.2 per cent on the previous 12 months to $3.1m.
Roeder warns that with the new Reserve Bank measures in place, the market could see further growth in house prices.
“With the Reserve Banks housing policies and the supply controls, the Auckland house price bubble is going to come down again, but not by as much,” Roedes said. This