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Momentum Continues in Auckland’s Apartment Market

By Daniel Horrobin

The Auckland City Apartment market has continued to gather momentum with strong sales activity on the back of positive buyer sentiment.

In the month of June, there were a total of 114 sales and our team completed 39 of these sales transactions. Our sales volume was up 15.5% as compared with 2020 and 20.5% when compared with 2019. The increased level of sales activity compared to the previous 2 years reflects the level of confidence we are seeing amongst buyers with positive investor sentiment returning to the market after a brief pause following the announcement of new regulations in March.

This heightened buyer activity has put pressure on stock levels as we saw new listing numbers marginally down in June 2020 – a trend not uncommon as we enter the winter months. However, while many perceive winter as being quieter, research shows that buyer activity and enquiry remains steady throughout this period, in turn proving to be a good time to go to the market and capitalise on low levels of properties for sale and high levels of buyer demand, as evidenced in our June sales results.

Competition remained strong in our auction room where buyer confidence was evidenced in our results, with 80% of Apartments taken to auction selling. This success did not come easily for every auction though, as some properties required timely negotiations to complete the sales transaction.

We were encouraged to see that one of the major banks has recently eased their criteria on apartment lending with smaller, one bedroom apartments (38sqm) now being a viable option for first home buyers. This is a very positive move that will continue to drive an increased number of first home buyers entering the apartment market, as the most affordable market to get their foot on the Auckland property ladder. – Daniel Horrobin – Director of City Realty Group

Property demand continues in June – more passive investors become active.

“The market continues to remain strong, with first home buyers, and owner occupiers continuing to be active. The investor status has somewhat changed with passive investors coming to the market expecting returns on price increases rather than yield. Inventory levels are down considerably and this is tightening the choice for buyers in general”. Treena Drinnan, Ray White New Zealand Chief Agency Officer. 

Over the past 12 months the change in property values have seen the average price across New Zealand rise by 22.8 per cent to an average value of $906,532. In the last quarter alone this is a rise of 7.2 per cent. This is the headline story that continues to drive the property market with interest rates sitting up between 2.2 per cent and 2.5 per cent on a fixed rate basis over 1 to 2 years.

The other key factor is the reduction in overall inventory that is available for buyers to select from when considering purchasing. The recent report by realestate.co.nz shows that the new listings in June totalled 7,769 which was 14 per cent down in comparison to June 2020. That continues to have a corresponding effect where the total amount of property listings on the market in June 2021 is 13,861 which is down 33.3 per cent in comparison to June 2020.

According to the latest CoreLogic house price index there was a further increase of 1.8 per cent in property values across New Zealand in the month of June. While this is a slight reduction on the previous growth rates there is still considered market momentum.  

When you look at the exceptional price growth over the past year it would be difficult to imagine that this would be sustainable where some individual markets have risen by more than 30 per cent. Is this going to be possible over the next 12 months? There are certainly reasons to believe that the property market will continue to have a growth rate with most economists suggesting that this will slow back from the extraordinary year that has been to around 15 to 18 per cent over the next 12 months. A substantive change and lift in equity value is expected and with interest rates being between 2.2 per cent and 2.5 per cent there continues to be a buyer pool which see logic in the value of price increases

Check out the latest market insights: https://raywhite.co.nz/ray-white-now/

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