$900 Billion Worth of Property And Nothing to Buy in Auckland

Auckland, New Zealand - 28th July 2016 - If it were a game of Monopoly, we'd have players tipping over the board, frustrated at the state of the Auckland property market.

Everyone knows that Euston St and Pall Mall are the ones people always land on and savvy players snap them up as soon as the dice rolls their way. Why? The properties represent good value for money, they're near public transport (Kings Cross and Marylebone stations), the power company and jail, and close to the best neighbourhood on the board, the orange set of Bow, Marlborough and Vine streets.

But a dire shortage of housing stock, population growth driven by migration coupled with historic low mortgage rates have all been game-changers, and Auckland's property has become more of a gamble than a "safe as houses" move for investors keen to extend their portfolios.

A report released today by Corelogic NZ, backs up their predicament. It shows New Zealand has $900 billion worth of property and yet new listings have fallen by 8 per cent in the past month and 12 per cent in the past year in Auckland. Total listings have also fallen and Auckland sales volumes have fallen by 4 per cent.

The report also says that rent has not increased in line with house prices. "Low wage growth prevents rent increases beyond a few per cent," CoreLogic points out.

Auckland Property Investors Association president Andrew Bruce says there is a strong appetite for Auckland properties but that there is a shortage of suitable investment property.

“This is simply not a buying-phase for many established long term buy-and-hold investors," says Mr Bruce.

"I personally haven’t purchased a property for the last two and a half years. Instead I am focusing on adding value and making improvements to my existing rentals to increase the lengths of tenancies."

He says investors buy on numbers.

"The (high) prices now are choking potential returns. Affordability is just as much an issue for long term buy-and-hold investors as it is first home buyers at this phase of the property cycle."

Mr Bruce also points out that the net migration figures to Auckland as compared to the rest of the country show that there is a global appetite for Auckland residence which is something investors are well aware of.

CoreLogic NZ says the July 2016 shows:

• Population growth is still strong, driven largely by migration, which although coming off its peak, is likely to stay strong for some time yet. Kiwis returning from Australia or not leaving to live there are a major component of that population growth.

• Mortgage interest rates are at historic low levels and may fall further.

• At a nationwide level, values and sales volumes are on the way up again, largely outside Auckland.

• Investor activity, which slowed briefly late last year in response to lending restrictions, has picked up again and is at record levels in many areas and more.

Mr Bruce says the Auckland Property Investors Association can see hope on the horizon in the form of Auckand City Council's Unitary Plan.

"This is the first step towards easing supply shortage," he says. "However the council has also got to be more pro-development and what we want to see are an increase in expediency in consent processing and the council actively courting the construction and development industry to Auckland.

"Auckland is changing. There has to be a change of mindset. We have people coming in faster than we can build houses for. I don’t see how we can cope unless we grow upwards."

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