Record Supply Still Not Enough - Market Indicators Report | Second Half 2017 AUCKLAND RESIDENTIAL DEVELOPMENT REPORT - Colliers International
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Market Indicators Report | Second Half 2017 AUCKLAND RESIDENTIAL DEVELOPMENT REPORT Record Supply Still Not Enough SOTO Meadowbank, Auckland Architect: Monk Mackenzie Developer: Southside Group Accelerating success.
O.K.L.A. 3 Kaipiho Lane, Albany, Auckland Architect: Ignite Architects Developer: Kingsman Development O.K.L.A. is a collection of 117 contemporary and refined apartments over six levels with a boutique retail offering at ground floor. Located in the heart of Albany, O.K.L.A. has a choice of 1,2 and 3 bedroom apartments with generous balconies. O.K.L.A. has been inspired by modernist architecture, with an honest, functional and timeless aesthetic, bringing everyday luxury to Albany.
Contents Auckland Macro - Economic Factors 1 Auckland Residential Property Indicators 2 Residential Market Overview 3 New Zealand Residential Market 4 Auckland Residential Market 4 colliers.co.nz/Find-Research Follow us on LinkedIn: Colliers International - New Zealand Follow us on Twitter: @Colliers_NZ Subscribe on YouTube: ColliersIntNZ
Macro-Economic Factors
INFLUENCING THE AUCKLAND RESIDENTIAL PROPERTY MARKET
POPULATION EMPLOYMENT & WAGES CONSTRUCTION COST
Population changes adjust the pressures Changes in unemployment and wages Changes in construction and material
on the housing market. change a household’s willingness to costs affect sale and land prices.
take on more debt.
14 % Increase in annual
net migration. 0.4 % Decrease in
unemployment. 5.8 % Changes in construction
and material costs affect
sale and land prices.
AUGUST 2016: 32,187 JUNE 2016: 5.4% JUNE 2016: 1,928
AUGUST 2017: 36,796 JUNE 2017: 5.0% JUNE 2017: 2,040
Source: Stats NZ, Permanent & long-term migration by country of residence, Source: Stats NZ, Labour Force Status by Source: Stats NZ, Price Index by Item of Capital Goods;
citizenship and NZ area (Monthly) Sex by Regional Council (Annual-Jun) (Base: September Quarter 1999 = 1000) (Quarterly-Mar/Jun/Sep/Dec)
FINANCING GOVERNMENT POLICIES INFRASTRUCTURE
Changes in mortgage interest rates affect Government policy changes alter the Changes in infrastructure and public transport
household’s ability to repay their mortgage. supply and demand balance of a can promote access to the local area and
housing market. subsequently boost property values.
0.2 % Increase in two-year
fixed mortgage
interest rates.
June
2017
The Reserve Bank
published a consultation
paper seeking feedback on
serviceability restrictions
July
2017
The Waterview
Tunnel opened.
AUGUST 2016: 5.1%
such as debt to income (DTI), limiting The 2.4km tunnel is a key piece of the
AUGUST 2017: 5.3%
the amount that people can borrow to a Western Ring Route and runs between Point
multiple of their income. Chevalier and Mount Roskill.
Source: RBNZ, New residential mortgage interest rates (average % end of month) Source: RBNZ, Debt to Income limit consultation Source: NZTA
1
Residential Property Indicators
AUCKLAND | SECOND HALF 2017
RESIDENTIAL BUYER TYPES
41% 23%
Movers
23%
Multiple property First home buyers
owners Source: CoreLogic, Sep-17
6% New to market, 5% Re-entry &
2% Other
MEDIAN RESIDENTIAL SALE PRICE
APARTMENTS RESIDENCE SECTIONS
$
555,000 924,000
$ $
560,000
15% from a year ago
12% from a year ago 7% from a year ago
Source: REINZ, Aug-17 Source: REINZ, Aug-17 Source: REINZ, Aug-17
NEW RESIDENTIAL RESIDENTIAL MARKET AUCKLAND
BUILDING CONSENTS OUTLOOK SURVEY
12 YEAR
HIGH NET POSITIVE
10,265 UNITS 29%
from a year ago
Source: Stats NZ, Building consents by region (Annual-Aug) Source: Colliers International Research
Net percentage (optimists minus pessimists) of respondents
who expect the median price to increase over the next 12 months, Sep-17
NEW SUPPLY: APARTMENTS AVERAGE FLOOR AREA*
PROJECTS CURRENT SUPPLY BREAKDOWN 62/m2 to 172/m2
17 Completed Q2-17 AND Q3-17
CBD CITY FRINGE SUBURBAN
AVERAGE ASKING PRICE*
91 Under Construction 59% 25% 16% $ 9,222/m2 to
46 Marketing/Design Stage SUPPLY BREAKDOWN BY 2020
$
13,435/m2
2017F AND 2018F: 5,033 units (75 projects) CBD CITY FRINGE SUBURBAN
2019F AND 2020F: 5,922 units (62 projects) Depending on typology and location
53% 25% 22% *Average price and area of all individual developments tracked
NEW SUPPLY: TERRACED & DETACHED DWELLINGS
GROWTH AREAS AVERAGE FLOOR AREA* AVERAGE ASKING PRICE*
Hobsonville Point 107/m2 to $ 5,787/m2 to
Glen Innes
Mount Wellington
200/m2 $
10,773/m2
Depending on typology and location
*Average price and area of all individual developments tracked
All prices include GST and area based on GFA (internal and balcony area)
2As the market for existing houses and apartments slows, prices have
The Peninsula
stabilised, but an Auckland public still wary of poor quality home
Orakei Bay Village, Auckland
Architect: Hulena Architects
environments and sometimes poor quality construction, are
Developer: Equinox Group still prepared to pay a premium for a new home.
The slowing in sales is not indicative of reduced demand. Population
growth continues apace. Changes to immigration policy might reduce
the number of students and lower-skilled workers, but will have little
impact on the number of highly skilled immigrants. The reason for the
slow down is less about base demand than pricing. A median house
price to median income multiple of around 10, even with very low rates,
only allows existing house owners to swap houses with other existing
house owners, and does little or nothing for the first home buyer. We do
think the median house price will reduce eventually, but by building less
expensive homes at scale, not by price reduction of existing properties.
How to increase that supply significantly when funding is tight, materials
and other costs of construction are high, and all the larger builders are at
capacity already, is the problem. New construction firms and techniques
as well as new institutional private renters will be required, along with
some imaginative thinking around policy, tenure and finance.
ALAN MCMAHON
National Director | Research and Consulting
3New Zealand Residential Market Outlook
Net Percent New Zealand
Residential Market
-20% 0% 20% 40% 60% 80% 100%
Queenstown
Tauranga/Mt Maunganui
Hamilton >> Between June 2016 and June 2017, household debt as a percentage of
Nelson nominal disposable income increased from 164.4% to 167.8%.
Wellington >> The value of housing stock increased from $905 billion in March 2016
Auckland to $1,031 billion in March 2017, a 14% increase (RBNZ).
Napier/Hastings >> New residential mortgage lending to investors dropped to $1.13 billion
Rotorua in August 2017, a 36% decrease from a year ago. Lending to first time
Whangarei buyers has dropped to $740 million in August 2017, a 3% decrease from
Dunedin
a year ago (RBNZ).
Palmerston North >> Multiple property owners (investors) are buying 39% of all the
Christchurch
residential properties sold, movers 26% and first home buyers 21%
(CoreLogic).
New Zealand Overall
>> The annual number of new residential building consents increased
Mar-17 Jun-17 Sep-17 from 29,627 (Aug-16) to 30,736 (Aug-17), an increase of 3.7% (Stats NZ).
Source: Colliers International Research >> The annual median price for August 2017 is $510,000 (13% annual
Percent of respondents who expect the median price to increase over the next 12 months. increase) for apartments, $530,000 (9% annual increase) for residence
and $226,000 (10% annual increase) for sections (REINZ).
>> Queenstown, Tauranga/Mt Maunganui and Hamilton are the three
centres where the highest proportion of respondents in our September
2017 Residential Market Outlook Survey expect the median price to
Auckland Apartment Supply Timeline increase over the next 12 months.
CBD City Fringe Suburban Future Supply
5,000
4,500
4,000
3,500
Auckland
Residential Market
Number of Units
3,000
2,500
2,000
1,500
1,000
>> Multiple property owners (investors) are buying 41% of all the
500 residential properties sold, movers 23% and first home buyers 23%
0 (CoreLogic).
2017F
2018F
2019F
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
>> The annual number of new residential building consents increased
Source: Colliers International Research from 9,851 (Aug-16) to 10,265 (Aug-17), an increase of 4.2% (Stats NZ).
Note: Only completed and units in the construction, marketing or design phase are included. An
apartment is classified as a building that has 10 or more residential units stacked horizontally and/
>> The annual median price for August 2017 is $555,000 (12% annual
or vertically. increase) for apartments, $924,000 (7% annual increase) for residence
and $560,000 (15% annual increase) for sections (REINZ).
>> The mean residential weekly rent in September 2017 is $524 in
Auckland City, $467 in Franklin District, $512 in Manukau City, $582 in
North Shore City, $489 in Papakura District, $522 in Rodney District
and $500 in Waitakere City (MBIE).
Auckland Residential Market Outlook
>> Since our last report (1H2017), 1,059 apartment units (17 projects) have
Mar-17 Jun-17 Sep-17 been completed and 1,129 apartment units (20 projects) have been
60%
announced.
50%
>> The total number of apartment units estimated for completion in
40%
2017 and 2018 is likely to reach around 5,033 units (75 projects), with
Net Percent
30% approximately 5,922 more units in 2019 and 2020 (62 projects).
20%
> In 2017, 13 apartment projects were identified that will not proceed
10% under original plans. Eight of these sites are currently being re-
0% marketed for sale or have sold, three have been abandoned under
All New Existing New Existing
Dwellings Apartment Apartment Terraced & Terraced & current proposals and two have been deferred.
Detached Detached
House House
> An increasing proportion of respondents to our September 2017 Market
Source: Colliers International Research Outlook Survey thought median prices in the next 12 months would
Percent of respondents who expect the median price to increase over the next 12 months. increase for new apartments and new detached and terraced homes
compared to June 2017. However, respondents were less optimistic
about existing homes.
4Boathouse Bay
Snells Beach, Auckland
Architect: Crosson Architects
Developer: Arabella Lane Limited
For more information contact: Colliers International Research
and Consulting offers a range of
Alan McMahon Josh Lee commercial and residential
National Director | Research Co-ordinator property solutions:
Research & Consulting
Chris Farhi • Property Investment Strategies
David White Director | Strategic Consulting • Demand & Supply Studies
Director | Consulting
Caity Pask • Market Analysis & Forecasts
Leo Lee Senior Analyst | Strategic Consulting • Feasibility Analysis
Research Manager
• GIS Spatial Analysis
Elena Christodoulou Colliers International • Catchment Analysis
Research Analyst Level 27, SAP Tower
• Lease Audit & Benchmarking
151 Queen St,
Emily Duncan Auckland • Site Options Analysis
Research Analyst +64 9 358 1888 • Corporate Real Estate Strategy
• Financial Analysis
• Business Cases
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