This month, I thought it was well worth a specific look at housing patterns in Auckland. Values across the super-city have dropped by 6% from the ‘mini peak’ earlier in the year, larger than the nationwide fall of a touch less than 4%. What factors might help explain the extra weakness that seems to have emerged in Auckland’s property market?
Like the rest of the country, some key, common drivers stand out as restraints on Auckland. First, although mortgage rates are now coming down (pretty quickly), they’re still relatively high by past standards, and of course,, anybody who has previously fixed at higher rates won’t benefit from the current falls for a few months down the track.
Second, and related to that, housing affordability is still a significant challenge in Auckland (and elsewhere, too). Mortgage payments on a new loan currently absorb around 58% of the median household income in Auckland, about 10 points above its own average. Nationally, that figure is a touch lower at 54%, but still around 10 points above normal.
Third, the listing situation is firmly in favour of buyers – and that tends to weigh on prices. Total stock listed on the market available to buy is significantly higher than a year ago in most parts of the country (as new listings have risen but agreed sales at the other end of the pipeline have stayed low). Yet, Auckland is at the upper end of the spectrum, with a roughly 36% rise compared to a year ago – versus Canterbury, for example, with ‘only’ a 9% increase.
Part of that extra growth in listings across Auckland is undoubtedly the continued pipeline of new-build townhouses coming onstream. Indeed, in many ways, the NZ-wide construction upturn that ran until the middle of...
