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Auckland Apartment Report – May 2023

By Daniel Horrobin

LVR restrictions easing – does this signal the bottom of the cliff?

On 1 June this coming month, bank LVR rules are easing somewhat. Not a lot, but a step in the right direction.

“Does this signal a bottoming out of property values? Watch this space,” says Director of City Realty Group, Daniel Horrobin.

Ray White’s Loan Market Mortgage brokers are optimistic these changes will free up lending but at the same time, point out inflation and associated high interest rates remain a stubborn hindrance to borrowing.

On a positive note, the BNZ has announced this week that they are opening their doors beyond existing customers to new-to-bank customers, which is a significant development in that space.

Daniel says: “Many are predicting the Reserve Bank will increase the OCR a tad on the 24th of this month and hopefully that will see the back end of those increases”. Adrian Orr has recently stated: “What we’re seeing is what we are hoping to observe, which is less spending to better match the supply capacity, inflation pressures easing, and the economy working its way through the current environment.” 

April saw properties for sale in the CBD dip below 600 for a time but remain reasonably steady. Buyer activity is encouraging with open home attendances reasonably healthy in recent weeks.

This is reflected in auction clearance rates. Ray White’s Central City office, which deals with the majority of our central apartment sales, sold three-quarters of properties on the day in our last auction for April, with the remainder successfully sold post auction. This level of clearance looks likely to continue in May, with three-quarters of properties sold on the floor in Central City’s first May auction.

In almost all cases these auctions are attracting multiple bidders, providing our sellers with on-floor evidence of perceived value on which to base their decisions. Investors continue to drive hard bargains.

On the other hand, early indications are that total market sales in the CBD reported for April have not replicated a comparatively healthy March. This is no surprise as the month of March has historically been one of the most productive for sales activity.

In the rental space, demand for central city apartments continues with the number of properties available down again month on month to well below 350 currently. Landlords continue to profit as rents rise as a result. Students and professionals are significant drivers of demand. 

Trade Me’s latest rental price index shows growing demand for smaller abodes is driving record-breaking new highs in rents, according to March 2023 figures. Nationwide the median weekly rent for an apartment was up 8 per cent year-on-year to $540 per week. We are yet to see the rents now being achieved translate into increased apartment values but it would logically follow.

Ray White’s licensed agents are well equipped to help both sellers and buyers on their property journey, being well-briefed on market dynamics.

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