2017 MID-YEAR Market Review - Positive Real Estate
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2017 MID-YEAR Market Review
A lot has happened since we released the 2017 Property Investor’s Guide to the Market in December last year. Especially as we head into winter, there is much more uncertainty about the direction of the property market, and whether or not the growth the market saw over previous years is sustainable for 2017. If you’ve been following the media, economists, and property experts, you will know that no opinion is the same. And each market is a different story at the moment – while Auckland cools off Wellington surges ahead. Meanwhile Christchurch remains flat. So what’s really going on in the market at the moment? Is Wellington’s growth simply a ripple-on from the Auckland effect, or is there more to it than that? And, most importantly, are there still growth spots to be found? We’ve done the research to present you with a mid-year review of the national property market. 2017 MID-YEAR Market Review Copyright © 2001-2017 Positive Real Estate (NZ) Ltd. 2
AUCKLAND
3-MONTH GROWTH: -0.1%
6-MONTH GROWTH: 1.2%
1-YEAR GROWTH: 11.0%
10-YEAR AVERAGE GROWTH P/A: 8.08% (RPNZ, Mar 2007-Mar 2017)
Key Market Drivers
• Population growth
• Lack of housing supply
• Building consents not keeping
up with demand
In our 2017 Property Investor’s Guide to
the Market, released in December last
year, we noted that Infometrics predicted
the undersupply of around 32,000 houses
would be the primary driver of the Auckland
property market going forward.
Since December, Auckland’s growth has
slowed, but there’s still massive population
growth and undersupply of properties. What East West Connections
you might expect to see is Auckland’s growth project area map. Watch the Video
filtering out to suburbs and regions further
out from the city. The Rodney District, for With Auckland’s city fringe extending farther
example, has had 4.1% 6-month growth, and farther out, suburbs like Grey Lynn,
compared to Auckland City’s 1.2%. Pt Chevalier and Mt Albert are now out of
2017 MID-YEAR Market Review Copyright © 2001-2017 Positive Real Estate (NZ) Ltd. 3
many buyers’ price range. Suburbs like these
were considered affordable before, but now
there’s a new reality, and South Auckland
has become more attractive to investors and
homebuyers alike. Our investors are looking
for value for money in areas like Mangere and
Manukau. These South Auckland locations
are increasingly popular because you can find
better quality and more spacious homes for
Avenue Apartments, a Du Val development
less. planned for Mangere Bridge.
Mangere is part of the East West Connections
transport project, a programme to improve
commuter travel, public transport and freight
efficiency in the area between Onehunga,
East Tamaki, and Auckland Airport. This area
employs over 130,000 people and generates
more than $10 billion a year in GDP (2nd
largest area in Auckland behind the CBD).
The bus station in Manukau, to be opened
in Q2 2018, is going to dramatically change
the way South Aucklanders travel to
and from the city. The is part of the new
Southern transport network, and is funded
by Auckland Council and the Government
through the NZ Transport Agency at the
expected construction cost of approximately
$35 million.
Du Val Group’s Lakewood Plaza is a prime
example of the stunning residential
development happening in Manukau.
2017 MID-YEAR Market Review Copyright © 2001-2017 Positive Real Estate (NZ) Ltd. 4
TAURANGA
3-MONTH GROWTH: 0.9%
6-MONTH GROWTH: 4.1%
1-YEAR GROWTH: 17.5%
10-YEAR AVERAGE GROWTH P/A: 4.38% (RPNZ, Mar 2007-Mar 2017)
Key Market Drivers
• Low supply of housing stock
• High rental demand, driving rents and
increasing yields
• Population growth coming from Auckland
• Lots of infrastructure planned for the area
• Massive commercial and industrial hub (Source: Priority 1)
(part of the economic Golden Triangle)
Tauranga is a market to watch. Over the 40% cheaper on average than Auckland; this
past 10 years, the average annual growth is a huge drawcard for businesses.
has been just over half that of Auckland, but
over the last 1-2 years, this has really picked For growth spots, we’re looking at areas like
up. Homebuyers and investors are looking Papamoa, The Lakes, and even Omokoroa.
away from Auckland, and Tauranga is a really
attractive, comparatively affordable market. Papamoa has huge amounts of infrastructure
It’s New Zealand’s 5th largest city, and had work at the moment – it’s about to be
New Zealand’s fastest growing economy as of connected to Tauranga via the upgraded
March 2016. What’s more, office rents are expressway, which is due to open soon.
2017 MID-YEAR Market Review Copyright © 2001-2017 Positive Real Estate (NZ) Ltd. 5
The Lakes is a stunning subdivision in
Tauranga, and just 8 minutes from the CBD.
Property managers in the area report that If you’re looking even further into the
property is going as soon as it’s being listed future, don’t let Omokoroa fly under your
for rent. This is just such a great lifestyle investment radar. While this is right at
area; it’s right by the beach, with people the edge of property managers’ scope in
flowing in from Mt Maunganui for more Tauranga, there are subdivisions going on
affordable property. Papamoa is about a 20- everywhere you look. Omokoroa has a
30 minute commute to the city. beautiful beach and is attracting retirees or
people who are able to work remotely. At
The Lakes is a huge industrial and the moment, the commute is 20-25 minutes
commercial area. Businesses are now out of Tauranga, and the road can get badly
looking at The Lakes for commercial leases congested. But within the next 3 years, this
– Brother International have just set up their road will undergo huge upgrades, making the
headquarters there, and they retained all commute much faster.
their staff with the move. The Lakes is quite
established, which is attractive to prospective
residents. This area is starting to attract a
top-tier demographic: boats and flash cars
are a common sight around here.
2017 MID-YEAR Market Review Copyright © 2001-2017 Positive Real Estate (NZ) Ltd. 6
HAMILTON
3-MONTH GROWTH: 1.4%
6-MONTH GROWTH: 0.3%
1-YEAR GROWTH: 14.4%
10-YEAR AVERAGE GROWTH P/A: 4.93% (RPNZ, Mar 2007-Mar 2017)
Key Market Drivers
• Low supply of housing stock
• High rental demand, driving rent
• Auckland investors are heading to
Hamilton for affordability
• Massive commercial and industrial hub
(part of the economic Golden Triangle)
Click image above to read full article.
First and foremost there’s the expansion of Auckland has been growing significantly
the Waikato expressway which is due to be over the past four years, whereas Waikato
completed in 2019. This will close the gap has only seen this growth over the past 18
between Auckland and Hamilton allowing months. Over the last 10 years, Hamilton’s
easier commute for individuals. Businesses average growth has been just over half that
are also catching on to the benefits of of Auckland. As the Waikato’s economic cycle
setting up shop in Hamilton and are taking tends to run a few years behind Auckland, it’s
advantage of lower costs, while still being possible we could see further catch up in the
within close proximity to Auckland. Waikato when Auckland starts to slow.
2017 MID-YEAR Market Review Copyright © 2001-2017 Positive Real Estate (NZ) Ltd. 7
WELLINGTON
3-MONTH GROWTH: 3.1%
6-MONTH GROWTH: 7.9%
1-YEAR GROWTH: 20.8%
10-YEAR AVERAGE GROWTH P/A: 3.86% (RPNZ, Mar 2007-Mar 2017)
Key Market Drivers
• Very low supply of homes
• High rental demand
• Lower end of the market is being pushed
by the first home buyers desperate to get
in before it goes too high
Having seen just 1.1% average annual growth
between March 2007 and March 2015, the In the capital, more than 170 groups recently
viewed an inner-city apartment that was
Wellington property market was well overdue expected to go for a third more than its rateable
for a huge market correction. value of $290,000. (Source: RadioNZ)
Click image above to read full article.
There are such low volumes of stock that
houses are snapped up quickly, and often
significantly above CV. Buyers are being Porirua) have had upwards of 20% annual
pushed out south, north and west – with growth.
those areas now seeing huge value increases
as well. In 2016, Wellington and its satellite Now, even Wellington’s apartment market is
towns (Lower Hutt, Petone, Johnsonville and taking off, with massive queues for inner-city
2017 MID-YEAR Market Review Copyright © 2001-2017 Positive Real Estate (NZ) Ltd. 8
apartment viewings. The apartment market
in Wellington has been virtually flat for
almost two decades.
There is a huge shift in the attitude towards
Wellington, with the capital’s booming
technology, film and startup sectors. Retail
giants, such as David Jones and Mecca, are
moving to Wellington in droves. The number
of empty commercial spaces in the city
recently dropped by 7%.
(Source: http://www.stuff.co.nz/business/92333440/
wellington-bounces-back-following-november-quake)
Wellington is also just a really attractive
place to live. It’s compact, there are lots
of jobs, and the commute is better than
Auckland by a country mile. It is also a really
entertainment-focused and cultural city –
there is so much to do. Hospitality has gone
through the roof, with more than 300 cafés,
restaurants and bars in the city (more per
capita than New York).
The number of building consents in
Our investors snapped up some of these
Wellington was exceeding decade highs, top tier Alpha apartments, planned for Kent
though took a sharp fall after the November Terrace in Wellington.
earthquake. This has been back on the
rise after the temporary disruption. If you
look around the city, the huge amount
of construction activity is evident – there
are apartment buildings and commercial
developments going up all over the place.
2017 MID-YEAR Market Review Copyright © 2001-2017 Positive Real Estate (NZ) Ltd. 9
CHRISTCHURCH
3-MONTH GROWTH: -0.3%
6-MONTH GROWTH: -0.5%
1-YEAR GROWTH: 1.4%
10-YEAR AVERAGE GROWTH P/A: 3.48% (RPNZ, Mar 2007-Mar 2017)
Key Market Drivers Rents have stabilised in the city after a sharp
spike in demand for accommodation after
• 98% of infrastructure and roading work is the earthquake. They’re now sitting around
now complete in the CBD pre-earthquake levels, and seem to have
returned to a normal seasonal cycle of ups
• The current CBD population is 6,000
and downs.
– this is estimated to rise to 7,600 by 2018
and 20,000 by 2041
So what does Christchurch look like now? And
• Economic hub of the South Island with what is in store for its future?
an international port and airport
With the SCIRT (Stronger Christchurch
Infrastructure Rebuild Team) roading and
infrastructure work almost complete in
There’s a real story in the data here. While the CBD, Christchurch has shifted from
every other region has had massive growth recovery to rebuild. The CBD is starting to
in the past 3 years, Christchurch is still being take shape. The Deloitte building and the Tait
rebuilt. With only 3.48% average annual Communications Hub both opened, creating
growth over the past 10 years, and even a a hive of business activity. The ANZ centre,
slight decrease in capital value over the past which opened in 2015, also hosts big retail
6 months, Christchurch will catch up. It’s not names like Glassons, Hallensteins and Mecca
a matter of if, but when. Maxima. The Re:Start mall has extended
2017 MID-YEAR Market Review Copyright © 2001-2017 Positive Real Estate (NZ) Ltd. 10leases until 2018 due to popular demand. The At the moment, you can buy great quality in
Arts Centre has reopened, and the new bus great locations in Christchurch for $600-700k.
interchange is up and running. You need to think – in another year or two,
will you be able to get that kind of value for
Christchurch is great property market for your money?
opportunists. When you invest in a rising or
hot market, you have the security of knowing You also have a unique chance to buy in
the market’s got steam, but you’ve also areas that will drastically change as the
already missed out on the early stages of rebuild continues. There are areas which
growth. If you can invest in a countercyclical may not have been great investment choices
market like Christchurch, and you’re before the earthquake that will actually
prepared to wait it out for the growth, you be much closer to central projects and key
could make some really good gains. transport routes once the city is rebuilt.
Alternatively, you can look for deals with
instant equity. For example, our buyers
in Verve on Peterborough Street received
exclusive discounts of more than 10% off
valuation.
The CBD is taking shape, with many residential complexes in the
central city either under construction or in planning stages. This
striking development is Verve Precinct, on Peterborough Street.
2017 MID-YEAR Market Review Copyright © 2001-2017 Positive Real Estate (NZ) Ltd. 11QUEENSTOWN
3-MONTH GROWTH: -0.3%
6-MONTH GROWTH: -0.5%
1-YEAR GROWTH: 23.7%
10-YEAR AVERAGE GROWTH P/A: 5.61% (RPNZ, Mar 2007-Mar 2017)
Key Market Drivers It is a volatile property market, however.
While it’s been a top performing market for
• Low supply of housing stock the past few years, boasting annual growth
in the 30% range and a million-dollar median
• Massive shortage of rental property
house price, Queenstown has shown signs
• Massive lack of rental property of cooling off a bit recently. Investors need to
remember that buying at the high means that
• Building not keeping up at some point your property might be worth
• Excess supply could be the only thing less than what you paid for it. That’s why we
to slow the growth here think of Queenstown as a real long term, buy-
and-hold market.
Queenstown is an interesting market
because a lot of people think it’s just driven
by tourism. But Queenstown is so much
more than that – it’s a lifestyle location, it’s
beautiful all year round, and it attracts a lot
of wealth and retirees. It’s also a national
business hub, hosting company conferences
and high profile corporate meetings.
Click image above to read full article.
2017 MID-YEAR Market Review Copyright © 2001-2017 Positive Real Estate (NZ) Ltd. 12COPYRIGHT © 2016 POSITIVE REAL ESTATE (NZ) LTD. Positive Real Estate (NZ) Ltd does not provide advice on investments. All interested parties must rely on their own research before making any investment decision and should seek advice from a qualified Financial Planner or similar professional. The information contained within this document has been compiled from various sources. While we believe the information to be correct we take no responsibility for errors and omissions. Please ensure that youvalidate all information yourself. 2017 MID-YEAR Market Review Copyright © 2001-2017 Positive Real Estate (NZ) Ltd. 13
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