5 signs that tell us the Auckland property market will thrive
Over the last three months there’s been a lot of panic around Coronavirus – and fair enough, it’s certainly scary. We’ve been getting questions about whether this will affect the Auckland housing market and the honest answer is that yes, it could.
However, the expert consensus is that the economic effects of the virus will be short-lived and that house price growth may slow, but only in the short term. With that in mind, here are five key reasons why the Auckland market is going to keep thriving for years to come
1. Population growth without supply increases
Auckland’s population is over 1.66 million, and almost 35% of the country’s residents live here. Stats NZ estimates that during the 30 years from 2018 to 2048, the city’s population will increase by 720,000 to reach almost 2.4 million.
To house all these new residents, we’ll need 313,000 dwellings. These numbers suggest that Auckland will continue to struggle with a housing shortage, which will inevitably push prices up.
2. Economic growth
The number of jobs available in Auckland increased by 26% over the last five years, according to Auckland Council. That’s an increase of over 190,000 total jobs, or 38,000 new jobs every year.
Unemployment is at record lows and the city’s economy is expected to continue growing by 2%+ a year for the foreseeable future. Needless to say, the more jobs and growth there is in Auckland, the more demand there will be for property.
Auckland’s property market was still performing in late February.
3. Government spending
The government is planning a huge infrastructure spend in Auckland over the next 10 years. Big projects include the City Rail Link, huge upgrades to the Western and Northern motorways and improvements to suburban rail links.
All this spending on transport and infrastructure will help stimulate the local economy and make getting around easier—and that makes property in the area more attractive too.
4. Decreasing interest rates, increasing demand
In response to the economic repercussions of the Coronavirus, the Reserve Bank of New Zealand just cut the Official Cash Rate 0.75 basis points to a record low 0.25%.
As banks begin to pass this on, retail interest rates will decrease to the lowest levels ever in New Zealand. That means it’ll be easier and more affordable to purchase a home and service a mortgage – which is sure to increase demand for property.
5. The numbers are heating up
Barfoot and Thompson, Auckland’s leading real estate agency, hosted 216 auctions in the first week of March, with 118 successful sales (55%).
That’s 23% more properties sold by auction than during the same week last year. The agency also reports that February was a busy and successful month in the auction rooms, which suggests that demand is strong in the city.
Despite the threat of the Coronavirus, there have been few signs of a slowdown in the Auckland property market. Auction activity is high and all the fundamentals that drive price growth for Auckland property are still in place, including population growth, decreasing interest rates and a strong economy.
The point is, there’s no need to panic about the property market – it’s business as usual here in Auckland.