House price boom: 10 suburbs buyers should target now
New Zealand house prices will rise by up to 7 per cent in 2020, according to economists at one of New Zealand’s major banks, so which suburbs should savvy buyers target now before prices soar?
Westpac predicted this week that the cancellation of capital gains tax combined with tumbling mortgage rates would push prices higher next year. It believes the turnaround in the market will be most pronounced in Christchurch and Auckland, where markets have been weakest.
The biggest Auckland beneficiaries are those suburbs that were pushing towards or had fallen below the $1 million mark. The 7 percent boost would see house values in Ellerslie, Glenn Innes, Lynfield, One Tree Hill and Three Kings, in central Auckland, and Birkenhead and Hillcrest, on the North Shore, climbing back to where they were during the height of the boom.
Mangere Bridge and East Tamaki, which didn’t suffer the slump seen in more prestige suburbs, would finally break the million dollar barrier.
In Christchurch, a 7 percent rise would push Fendalton from $985,000 to $1,053,950, and reverse much of the stagnation prevalent in the city’s housing market.
The prediction of a new house market boom comes as the Real Estate Institute’s House Price Index, which measures the changing value of property, rose 3.6 per cent to a record high in the year to September.
The median house prices across New Zealand increased 7.3 per cent, to a record high of $597,000, over the year earlier. This was pushed up by more houses selling in the $500,000 to $750,000 price bracket (now 32.4 percent of sales) and a modest increase in sales of properties above $1 million (to 32.4 percent).
Median house prices in Auckland rose 0.5 per cent to $848,000, and sales volumes were up nearly 3.6 per cent in the region over the year before.
Norwell is cautious. “It’s too early to call this a trend – especially as the median price has returned to around the $850,000 mark where we’ve seen median prices sit for a few years now.”
But she points out differences around Auckland, with Papakura district having a 58 percent increase in sales volume, and pickups of 19 percent, 16 percent and 15 percent in Franklin, Rodney and Manukau. Auckland city up 10.5 percent.
The regions with the biggest increase in median prices included Manawatū-Whanganui, Southland, Taranaki and Hawke’s Bay.
Those with the biggest price drops were West Coast, Northland and Nelson.
While the national volume of sales was flat, REINZ chief executive Bindi Norwell said it was the highest number of properties sold in a September month for three years. Just under 5900 (5896) properties sold this September, up 3.3 percent on September last year, mostly driven by a pick up in Auckland sales volume of 6.3 percent. The rest of New Zealand had a more modest 2 percent increase on last year, to 4073.
“This suggests that we’re starting to see the usual spring uplift and also that more confidence is starting to creep back into the market,” she said.
Regions with the highest volume of sales growth included Tasman, Otago and West Coast.
Mike Jones, ASB senior economist, has also commented on the REINZ figures.
“NZ’s housing market is springing into life. It’s an important sign monetary stimulus still works. It’s just that there are different sectoral impacts and lags to consider. We expect the housing market upturn to gather pace in coming months,” Jones wrote.
ASB had long been calling a spring lift in the housing market, due to mortgage rate cuts that began in autumn providing a boost to activity and prices from around now, given the usual lags in play.
“We’re now seeing clearer signs of this pick-up occurring. Importantly, Auckland activity has rebounded strongly from mid-year stagnation. Prices are starting to respond to the prior lift in activity. And new listings are rising from low levels, as sellers become encouraged. We expect the housing upswing to gather pace in coming months,” Jones said.
OneRoof editor Owen Vaughan told the Herald that there have already been strong signs of increased activity across the market.
“We’ve been hearing from agents in Auckland since the start of spring and illustrate the strength of the turnaround in city’s real estate market,” Vaughan said.
“Open homes are packed, and we are seeing sale prices well above CV in many of premium suburbs that had been in a funk. Auctions clearance rates are also ticking upwards, which will give homeowners who had been unsure of the market the confidence to list their properties.”
Looking to the rest of spring, a pick up of auction sales to their highest proportion in 10 months, accounting for 13.5 percent of sales nationally, and 26.3 percent of Auckland sales, is promising. But with inventory of properties for sale still dropping (September was down 7.3 percent on last year, decreasing in 11 out of 15 regions) the lack of properties to meet buyer demand may slow down October sales figures after such a booming start.
Source: One Roof
Shaan Joshi – Real Estate Agent Auckland
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