What is causing Auckland's property value slowdown?

Auckland’s average property value may have fallen by 1.5% over the last year, but according to CoreLogic senior property economist Kelvin Davidson, this does not signify a ‘full-on downturn’ and is not due to weakness in either the top or bottom end of the market.

Davidson says that Auckland’s stagnating market is not so much about value brackets, but more about the geography and the strength of various suburbs. The most sluggish areas have been around Auckland City and the North Shore, with Rodney and Papakura showing some signs of growth – an unsurprising picture, given affordability in the first two areas is the worst in Auckland.

“Given low affordability and high levels of listings (hence plenty of buyer choice), it’s not surprising that pricing is ticking down to get some sales over the line,” Davidson explained. “This is something we’ll be keeping a very close eye on. But within that sluggish overall picture, we’ve been asked a few times about how the various segments of the market are faring, in terms of low value versus top-end properties. Are the highest value properties dragging down the market, or is the lower end the culprit?”

“The bottom line is that Auckland’s recent weakness in overall property values isn’t so much about high versus low value property within the different areas, but more about the areas versus each other,” Davidson said. “Auckland City and North Shore are generally the weakest and are outweighing continued small rises (or flat values) in cheaper areas such as Rodney and Papakura.”

Auckland has not seen any significant value growth since 2016, with the general pattern being lower-value properties outperforming the less affordable ones. The latter category has also seen greater divergence in value – for example, certain properties in the North Shore Coastal area are dropping more sharply than others. On the other side, cheaper property within more affordable areas has traditionally seen stronger growth than the more expensive areas.

“That’s not surprising, given that it’s more affordable and has had some scope for ‘catch-up’ growth,” Davidson said. “There may be some room here for lower value property to continue to outperform higher value segments across much of Auckland over the coming years, even if that takes the form of only small price rises while top-end properties flat-line or tick lower.”