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Auckland Apartment Report – September 2023

By Daniel Horrobin

Collective holding of breath stalling activity

“We can’t wait for the back-end of this coming election, because in the lead-up to it sellers are sitting on their collective hands reluctant to list for sale right now,” says Director of City Realty Group, Daniel Horrobin.

REINZ reports: “With sales counts up this month, the national inventory level is falling. More competitive prices and a ‘get in now’ attitude is bringing more buyers out ahead of this year’s election.”

“To be fair,” Daniel adds, “there are significant outcomes, particularly for investors, depending on the election result this time around.”

Available stock for sale in the CBD remains steady hovering around the 500 mark with no signs yet of bouncing back to previously seen higher levels.

On a positive note, the City Central office rated in the top 10 from more than 180 offices nationwide at the annual Ray White NZ awards.

Daniel says: “We are delighted to make the top 10 for the 2022/2023 year. As always however, improvement beckons.” The awards evening followed the annual Ray White Conference held at Aotea Centre and was the first time either event has been held since Covid hit our shores.

August was a solid month for our Auckland Central office with both listings and sales robust. The auction room reflected the REINZ comment above with competitive bidding seen across almost all properties.

Also, during the month the Reserve Bank left the official cash rate unchanged at 5.5%. Despite that, Data from Canstar shows a flurry of increases to fixed home loan rates last week.

Infometrics chief executive Brad Olsen said the moves highlighted the “increasing cost of borrowing on the international market.” Commenting on interest rates an ASB senior economist said: “There are so many moving parts I think we could continue to see volatility through the rest of the year. This is not just a New Zealand thing.”

On top of that a prominent Auckland city legal firm reports: “The number of mortgagee sales is increasing in mid-2023. We expect these sales will increase further as more borrowers come off fixed interest rates and, for many, financing becomes unaffordable”. However there is little evidence yet of these increasing mortgagee sales being reflected in the city apartment market.

Meanwhile, economists predictably cannot agree on where exactly the wider property market is heading. Westpac chief economist Kelly Eckhold says: “The bank expects an 8% increase in house prices in 2024. The main factor driving is the expected impact of migration and population growth.” Whereas chief property economist at CoreLogic, Kelvin Davidson, says he: “expects prices to rise between 3% and 5% next year, broadly in line with incomes”. Eckhold says: “The wildly differing views on what could happen depend on the extent to which people expect interest rates to affect house prices.”

Back home in the city centre rental space, upward pressure on rents continues. Website reports: “While there are likely several factors which feed into where rents are set, the latest increase corresponds with a big surge in immigration that has occurred this year, with almost 17,000 foreign workers arriving in New Zealand in the month of June alone. It’s likely Auckland was their main destination”.

Daniel says: “It appears large numbers of those Auckland bound also have the central city high on their list of preferred locations.” 

To summarise, Daniel repeats his advice from last month: “With spring upon us and buyers active, waiting may mean you are competing with a legion of sellers who waited just like you.”
As the winter months loom, it’s business as usual for Ray White’s licensed agents who are well equipped to help both sellers and buyers on their property journey, being well-briefed on market dynamics and the intricacies our city apartment market presents.

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