There has been plenty of coverage over the last 12 months that property prices in Auckland continue to rise. Barfoot & Thompson’s August figures show a 15.3% increase in the average price of an Auckland home over the last 12 months and they experienced their busiest August for 15 years – so the market remains busy. This is good news for those who own an Auckland property – your retirement nest egg, world travel fund or income generator is doing you proud right now.
But it’s Kiwis both in New Zealand and abroad who do not yet have a home who are baffled and disheartened by the market conditions. It’s those who went overseas and thought they’d save for a deposit while working in London or figured they’d start thinking about property when they got home. If that’s you, take heart, there are positive ways to look at this and good reasons to still consider Auckland a place to invest – whether you’re on your way home next year or in five years time.
“Houses will never be as cheap as they are now”
It’s an old real estate saying that has rung true for decades in Auckland. Here’s a graph of the average price of property sold by Barfoot & Thompson since the 60s. The property market is cyclical – it goes up and down and sometimes stays put for a while but the long game continues to look rosy.
Of course we can’t say for certain what the market will bring but we can look at trends and listen to experts. Tony Alexander, chief economist at the BNZ remains convinced that the fundamentals are still strong (strong migration, strong infrastructure investment, strong business confidence and a lack of supply of homes in Auckland) to keep property prices on the rise. Read more here.
Consider the effect of currency on your savings
As the New Zealand dollar weakens, your foreign currency goes further here. A recent Bloomberg article points out that while prices in NZ are up 20% that the weakening NZD means that for foreign buyers (expat kiwis included of course) prices have in fact barely moved. While this may be adding to the local angst and debate about foreign purchasers of NZ property, it does open the door a little for our expats. So consider the positive or negative impact FX will have on the deposit you have saved and the medium term cost of the property for you.
Your piece of land
The money aside, if New Zealand is home and it’s where you want to retire, bring up your kids or simply holiday, the advice is to stay in the market. Stay in the know about what’s happening, get your finances in order and have a plan for securing your piece of home. Barfoot & Thompson releases their sales stats each month and these are almost mandatory front page news. For more granular information for both Auckland and the rest of the country, following the REINZ releases each month (usually around the 10th of the month).
If you decide to buy before you are ready to move back, Auckland is always in need of good rental property. Sign up to receive regular information about rents, yields and information for landlords here.