New Zealand’s housing market has bounced back in 2018, with a 7.3% rise in house prices recorded this March. The new apartment market in Auckland saw a 30% drop over the second half of 2017 according to research by Colliers International, but new figures show that the market is steadily strengthening and sales and rental demand remains high.
New apartments in the Auckland area are valued at approximately $1.07m, and saw a 3% drop in asking price in the second half of 2017. According to national director Pete Evans, the prolonged election period resulted in an overall downturn for Auckland’s residential market, and the study also indicated that the Central Business District (CBD) was the main cause of the 3% fall, with prices dropping from $1.3m to $1.1m over a six month period.
The housing market across the city fringe has seen a stronger performance, with areas such as Epsom and the Eastern Bays continuing to see price growth. Prices also went up across the suburban market, with areas such as Albany, Hobsonville and Onehunga seeing a 5% increase over the first half of 2017.
According to Evans, the current trends are to be expected for a cyclical market which inevitably peaks and troughs over time.
“We are seeing a new level of high-quality apartments in the city bring with larger, better designed and finished apartments targeted at owner occupants,” says Evans. “It is typical that after a strong growth period of three years that the market will cool and stabilise, which is what occurred in 2017. The market for new apartments peaked in the first half of 2016 and has been decreasing ever since.”
“Sales activity will now be bolstered by banks being more active in lending, particularly to owner-occupiers of new apartments.”
Evans also stated that the number of new projects entering the market will likely decrease, which will trigger higher demand for existing projects. Collier International’s study found approximately 18 months of remaining supply, and Evans believes the market will remain undersupplied for at least three years.
“As the city grows and people continue to embrace urban living, Auckland needs new apartments in good locations,” he says.