Market Update and Trends September 2024
Kia
ora, and welcome to the September 2024 edition of our Auckland Market Update. If you would prefer to watch the video: https://youtu.be/s3HXIApWi-M
Whether
you’re buying, selling, or investing, or just generally interested, these
insights that I share today will help you make informed decisions in this
dynamic environment.
Whether
you’re buying, selling, or investing, or just generally interested, these
insights that I share today will help you make informed decisions in this
dynamic environment.
Overall Market Context
Nationwide,
the New Zealand’s property market has seen a cooling effect over the past year,
with the average property value dropping by 1.7% in the three months to the end
of August.
- This
decline is reflective of broader economic pressures, including higher
interest rates earlier in the year, which thankfully, have now started to
ease.
.
- Auckland,
specifically, has been at the forefront of this trend with prices falling more
significantly than in other regions.
Auckland Market Overview
In
Auckland, the average property price has fallen by around 3.4% year-on-year,
now sitting at approximately $1.278 million. This represents the lowest point
in over three and a half years.
The
decline has been driven by a mix of factors, including affordability
challenges, higher interest rates earlier in the year, and a cautious approach
from buyers.
However,
with recent cuts in the Official Cash Rate or (OCR), we’re beginning to see
early signs of a market stabilisation, with increased buyer activity,
especially at auctions.
Suburb Spotlight: Auckland Central and surrounds
- Suburbs
like Auckland Central, Grafton, and Newmarket have seen some of the most
significant price drops, with year-on-year declines ranging from 3% to as
much as 7%.
- These
areas, rely heavily on apartment sales and have been impacted by changes
in demand and shifts towards more suburban living post-pandemic.
- These
areas, rely heavily on apartment sales and have been impacted by changes
in demand and shifts towards more suburban living post-pandemic.
- On
the flip side, this presents opportunities for buyers looking to enter
these prestigious markets at a lower price point.
- On
the flip side, this presents opportunities for buyers looking to enter
these prestigious markets at a lower price point.
The Rental Market
- Despite
the cooling sales market, the rental market in Auckland remains
relatively strong.
- The
average weekly rent has increased by about 5.59% compared to last year,
now sitting at around $678 per week. Interestingly, the number of
properties available for rent is up 31.5% year on year, suggest possible
downward pressure on rents.
- The
average weekly rent has increased by about 5.59% compared to last year,
now sitting at around $678 per week. Interestingly, the number of
properties available for rent is up 31.5% year on year, suggest possible
downward pressure on rents.
- The
current increase is due to continued demand for rental properties,
especially in suburban areas where affordability is a key concern for
many tenants.
- The
current increase is due to continued demand for rental properties,
especially in suburban areas where affordability is a key concern for
many tenants.
Interest Rates and Market Sentiment
- Interest
rates have begun to fall, with the Reserve Bank of New Zealand reducing
the OCR, which has had a positive effect on market sentiment.
- Mortgage
delinquencies, while still up from last year, are beginning to trend
downward too.
- Mortgage
delinquencies, while still up from last year, are beginning to trend
downward too.
- This
shift is likely to encourage more buyers to enter the market, especially
first-time homebuyers, who have been particularly active in the current
environment, benefiting from less competition and lower prices.
- This
shift is likely to encourage more buyers to enter the market, especially
first-time homebuyers, who have been particularly active in the current
environment, benefiting from less competition and lower prices.
Investor Market Insights
- For
investors, the market remains challenging but potentially rewarding.
- High
interest rates earlier this year made it difficult for rental incomes to
cover mortgage payments, but the recent drop in rates could make
investing more attractive again.
- High
interest rates earlier this year made it difficult for rental incomes to
cover mortgage payments, but the recent drop in rates could make
investing more attractive again.
- Areas
like Manukau and Avondale are worth watching for their potential to offer
good rental yields as the market stabilises.
- Areas
like Manukau and Avondale are worth watching for their potential to offer
good rental yields as the market stabilises.
Government Policy Updates
- Recent
government policy changes, such as adjustments to the Bright-Line Test
and the introduction of stricter building codes, continue to influence
market dynamics.
- These
regulations have particularly impacted the investor segment, but with the
easing of interest rates, we might see a shift in investor confidence
moving forward.
- These
regulations have particularly impacted the investor segment, but with the
easing of interest rates, we might see a shift in investor confidence
moving forward.
Predictions for October and Beyond
Looking ahead to October and beyond, we expect the Auckland
market to remain relatively stable, with possible slight increases in buyer
activity as interest rates continue to fall.
However, the broader economic environment and upcoming
government policies will play crucial roles in determining the market's
direction.
If you’re considering buying, selling, or investing, now is
the perfect time to seek expert advice.