The Auckland property market in review: 2016
Auckland’s property market may not be the most affordable in New Zealand, but it certainly grabs the most headlines. In 2016 alone the Unitary Plan has promised to improve the situation, LVR speed limits have put a band aid the market’s issues and the median dwelling value has cracked $1million.
Despite Auckland’s issues, it’s still been a brilliant year and there’s plenty positive signs for the future. So, to celebrate the new year, and look back on the one that’s been we’ve put together a quick wrap up of events in Auckland’s property market this year.
The Unitary Plan
Auckland’s property market may not be the most affordable in New Zealand, but it certainly grabs the most headlines.
Earlier in the year the city council outlined a new vision for Auckland’s future with the Unitary Plan.
This comprehensive document outlined new zoning laws and areas for development, and will undoubtedly change the way that Auckland looks in the years to come. It’s a much-needed government response to the city’s housing shortage.
The ambitious plan has proposed to increase the amount of new dwellings that can feasibly be built in the city to 422,000 by 2041. If that goal is met, dwelling supply will exceed demand in Auckland for the first time in decades.
This strategy is absolutely essential for the continued prosperity of Auckland, as by 2041 our population is expected to almost double to 2.5 million. That’s a lot of new housing demand. Residents of the city can look forward to better planned, more affordable and more efficient housing in a future laid out by the Unitary Plan.
LVR speed limits
lending to investors was 16 per cent lower in October than in the previous month.
In October of this year the Reserve Bank made their presence felt, particularly amongst investors in the Auckland property market. They revised the loan to value ratio speed limits, mandating that no more than 5 per cent of bank lending to investors could be with a loan to value ratio of 40/60 or more.
The aim here was to moderate demand to reduce upwards pressure on prices, as well as risk associated with investor lending. Investor demand certainly felt the effects, as Reserve Bank data shows that lending to investors was 16 per cent lower in October than the previous month.
There’s no silver bullet for making houses in Auckland affordable again, as it’s an incredibly complex issue, but this change certainly represents progress.
The ripple effect
As Auckland’s prices and values skyrocketed, investors and home buyers began to look elsewhere in New Zealand – Tauranga, Hamilton and Whangarei in particular.
Houses in Auckland don’t come cheap. QV has the median value at well over $1million and most other authorities report a similar figure. As Auckland’s prices and values skyrocketed, investors and home buyers began to look elsewhere in New Zealand – Tauranga, Hamilton and Whangarei in particular.
The resulting increased demand in these cities has caused their median house values to increase by over 20 per cent in 2016. Auckland’s market is starting to slow down though, with value growth at roughly half 2015’s rate – but will the market turn in 2017?
Will the market turn?
Short of a crystal ball, there’s no way to be certain what Auckland’s house prices will do in the future. But several authorities on the Auckland market have said that signs are emerging showing that things may just be slowing down.
With the Unitary Plan soon to come into play and LVR limits in full swing that’s certainly a possibility. But if we do see prices drop, or moderate, don’t expect a crash. Few signs point towards a rapid drop in prices – a soft landing and a slow moderation is far more likely.
Whatever occurs, we’re sure 2017 will be a positive one for the market, and for all the new home buyers out there.
Happy new year and may you achieve all your property aspirations!