Taking a bite out of Auckland's property market
- By : Daniel Carney
- In : Residential Investment Property,Residential Investment Property Market Updates
- Comments : 0
Imagine you are reaching into a cookie jar. Now, picture there are five more other hands reaching into that same jar.
One of two things are going to happen. You're going to either be incredibly lucky and and haul one of those delicious morsels out and call it a day or at some point, you'll realise that the most you might come out with are just broken chunks or crumbs!
There are still some that have had trouble affording the deposit it would take to buy a home in New Zealand's most populated city.
For some, this has been Auckland's property market. A huge influx in demand for housing, either to be lived in or be used as a property investment, has been sweeping across the city. This has made competition fierce, driving up the average value of homes in this city by 24.4 per cent in the year to October, according to QV. In dollar figures, this is now $918,153.
While this has been a terrific window of opportunity for home owners to make large capital gains or continue to reap rental income from their investment property, it hasn't been the most welcoming of times for home buyers.
That's not to say that interest rates haven't been accommodative, as the the official cash rate has been at its lowest since January last year. But there are still some that have had trouble affording the deposit it would take to buy a home in New Zealand's most populated city.
But don't worry, your investment property goals aren't beyond reach yet. Change is on the way. What happens when too many people are trying to grab from the same cookie jars? Put out more!
New construction rising
According to a November 6 release by the Beehive, we can expect a surge of new housing to hit our market relatively soon. "We are making solid progress in lifting the pace of residential construction in Auckland," says Building and Housing Minister Dr Nick Smith. Annual building consents were at 8,721 – the highest level in ten years.
"This is the longest and strongest sustained growth in residential construction in Auckland's history," Dr Smith continued, pointing at four years of rapid building increases. Furthermore, he cited the National Construction Pipeline Report that forecast an extra whopping 80,000 new homes to be built between now and 2020.
So what do all these figures mean for someone figuring out how to create wealth? For one, the new housing that is set to flood the market will help douse the flames created from years of undersupply. This means that prices will cool and there affordability should return to better levels.
You'll have a far greater pick of choices in property type, location and sizing.
Furthermore, an August 27 report by the National Party announced eleven new Special Housing Areas (SHAs) that would provide up to 1600 new homes. SHAs are urban areas that have been selected for quick development of affordable housing. This is another way the big wigs in the government are trying to push prices down.
If you're aiming to snatch up a residential investment property over this period, not only should you be facing less competition, you'll have a far greater pick of choices in property type, location and sizing. Finding something to fit your investment objectives should be much easier.
But don't feel like aren't benefits from jumping into the market now. QV shows that rental prices across almost the entire city are on the up, which means you could be seeing terrific returns today. Either way, the outlook for residential property investment in Auckland looks to be bright.
Get in touch with Goodlife Financial Advice for all your property investment needs, and we'll see how we can have you munching on baked goods in each hand.
Here's to your financial independence!
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