Auckland Housing Activity

August 2001

The market has continued to improve this year with overall sales numbers up around 20% from a year earlier. Results are, however, quite mixed across Auckland with lower cost housing being slow to sell while property in the $350,000 plus price bracket is meeting a good demand.

The number of days to sell a property has fallen slightly in most classes of real estate which is an encouraging sign of rising demand.

The market appears late last year, to have reached the bottom of the current cycle and is now in the early stages of a mild upswing. Prices overall have not shown any increase. However, the general decline in value has now halted. Given the broadly improving activity, this should filter through to put some pressure on house prices with increases forecasted over the next two years.

Economists currently debate the possibility of a further 0.25% interest rate cut this month or next. Whatever the outcome it is likely to be relatively shortlived as increases in fixed rates tend to confirm the belief that floating rates are likely to rise in 2002.

There is no real prospect of a major hike in prices with the low inflation environment and little in the way of any population growth. In fact, New Zealand has been experiencing a population decline over the last year or two which has been a drag on the property market. Should this trend reverse with any new government initiatives, then the property market will benefit.

Some suburbs have however, outperformed. The introduction of strict school zones has resulted in increased demand in typical blue chip areas such as Epsom and Central Remuera which lie within the Auckland Grammar zone. This, coupled with recent strong activity for family homes, has raised prices in these localities and other areas have been similarly affected. On the North Shore, for example, the East Coast Bays/Rangitoto College zone has attracted more buoyant activity then the rest of the region as displayed in the graph below.