Written by Vicki Holder
The Auckland housing market is an on-going topic of conversation – is it going up, or down, or nowhere? Should we buy, or sell, or stay put? Property commentators Mark Graham and Ashley Church both take the view that we should feel positive about Auckland as a place to live and, more specifically, about its housing market.
What’s not to love about Auckland? Plenty of us have complained about the housing market and the growing pains it has been experiencing in recent times. But, on the positive side, there’s a lot happening right now that makes this city a compelling place to be, particularly as we see the benefits of changes that are making our city more liveable, say Graham and Church.
Interest rates are low and look likely to stay that way for some time to come, offering first homebuyers a more realistic opportunity to enter the market. Changing government policies and developments in building techniques are driving improvements in the quality of our housing stock, and outer suburbs are gradually being gentrified, adding further to the number of quality homes available for families. Auckland Council is behind some major civic projects aimed to modernise transport around the city and suburbs, reduce traffic congestion and upgrade infrastructure, and central city areas are being upgraded, making them more attractive to both locals andvisitors, which should bring increased tourist dollars into our economy.
Graham, who is a property commentator and publisher of the Design Guide and the Building Guide, and Church, a property commentator for OneRoof, have outlined for Ray White Damerell Group their top 10 good reasons for feeling positive about our city and its housing market.
1. FLATLINING MARKET, MORE AFFORDABILITY
The market has flatlined at the bottom of the property cycle. That’s good news for first homebuyers.
Mark: “It’s been happening for a year, so there are another two or three years where the property market will continue to flatline. There’s talk of a capital gains tax and plenty of uncertainty around the world political stage. But if you want to buy a house, this is the time to do it. The catch is, you have to be pretty robust financially because banks have tightened up. I suspect if the market drops then they’ll be forced to start loosening up their criteria.”
Ashley: “This is an opportunity for those who were struggling three or four years ago to get into the market. People can get themselves a pretty good deal now.”
2. LONG-TERM LOW INTEREST RATES
Low interest rates are locked in for some of the cheapest mortgage rates history has seen.
Ashley: “Five or six years ago, most commentators thought they were a historical quirk and would eventually return to higher levels. Every indication is now that they are systemic and will be with us for a long time. Although there might be some movement upwards, it won’t be much. Whatever locked them in at that low rate seems to be sustainable. Banks and the government are aware that any substantial movement in interest rates would tip over the economy – not just here but worldwide.”
3. STABLE VALUES
High demand for housing keeps values steady, averting the boom and bust cycle.
Ashley: “Although immigration has tapered off and there are fewer people coming into Auckland than a year ago, those numbers are still high by historic standards. That’s keeping pressure on prices and holding them up. Immigration will continue to keep pressure on houses, or at least sustain where they are at, for quite some time, as opposed to what’s happening in Sydney at the moment where they’ve had a drop of 11.5 per cent over the past 12 months. We haven’t seen that here. It’s only 2.2 percent year on year for the last 12 months. That will bounce back.”
4. MORE AFFORDABLE, MORE VARIETY
The nature of what’s being built is changing, creating greater opportunities for everyone.
Mark: “That’s because of the Unitary Plan and demand as well. More people want to live closer to the city. So there’s more demand for more intensified housing that people can afford, and which meets those criteria. For boomers living in mixed housing zones, if you have some money in the bank and you’re heading for retirement, it’s the perfect opportunity to develop your property.”
5. IMPROVED TRANSPORT & RECREATIONAL INFRASTRUCTURE
There’s a genuine effort by Auckland Council to address transport and other issues.
Mark: “Already, we’re seeing that with Lime scooters, bike sharing and Uber – it’s not just another cab company. It’s actually a whole new way of sharing cars. The drivers are a temporary measure until driverless cars come through. It’s just change. Fundamentally, the issues we’re facing around climate change mean we have to drastically change what we do. We will. Humans are eminently adaptable. As long as we don’t leave it too late.“
Ashley: “Some of the infrastructural issues we’ve grappled with for many years are slowly being addressed – things like the motorways and public transport systems being improved. The City Rail Link’s going to be completed in the next year or two. We’re looking at recreational infrastructure more carefully to see how we can make the city work better in terms of things like stadiums, event centres, public walkways and pedestrian-friendly spaces in the CBD. It’s a better place as a result.
“We’ve got the America’s Cup infrastructure coming over the next year or two, which will improve the waterfront even more. I remember when the Viaduct was a derelict industrial area that nobody went anywhere near. Now you go way further than the Viaduct along to Wynyard Quarter, and through to Silo Park. That whole area has been fixed.”
6. BETTER-QUALITY HOMES
Over the past few housing cycles, housing stock has vastly improved. Whole suburbs have gentrified.
Ashley: “In the previous boom and the one prior to that, we had issues like leaky homes. These big issues dominated the narrative in the media. There’s an absence of those now. They’ve been bought, the issues have been mitigated and the houses are back into the market as renovated homes. We don’t have a substantial structural issue with properties in the way we had in the previous two booms.
“In the three or four years prior to the height of a boom, speculators come into the market. They buy, they do houses up, and then put them back on the market. You end up with a stock of property that’s been improved and put back on the market in a better form than it was beforehand. So, you have an improvement in your overall stock, not just new property.”
Mark: “New housing techniques will make building more affordable. Our housing stock will get better over the next decade or so, both with the improved new homes being built, but also the requirement for rental properties to be brought up to a basic minimum standard for healthy living. While landlords may not be overly thrilled at the prospect of having to spend money on insulation, it’s definitely going to be better for society as a whole. “What we build will change as a result of reactions to climate change. Some building materials have very bad CO2 impact and others are very good. Taxes will come onto poorly performing products and the market will move back to things like brick, which is very good, with a much lower global warming footprint than products like concrete, I’m sad to say. The concrete guys are aware of the problems.
“Worldwide, we’re running out of sand. They’re starting to use trees. Laminated timber posts are as strong as steel. Steel is a bit less impactful than concrete. It’s still not great but for residential housing, more brick and timber, less concrete. New Zealand is perfectly poised for that with our timber production.”
7. GENTRIFICATION AND THE RIPPLE EFFECT
The ripple effect continues to see widespread gentrification and a vast improvement in the quality of housing throughout Auckland.
Ashley: “Each boom has seen a ripple effect which has gentrified the suburbs beyond ground zero, the CBD, wherever that ripple ends up. It was Ponsonby and Grey Lynn in the ‘70s and early ‘80s. Then it moved out to Kingsland. In the last boom it took in Ellerslie and Onehunga. The boom we experienced this time took in Te Atatu and started to push into the peripherals of places like Mt Wellington. These are suburbs that have traditionally been blue-collar areas. That process is something to be positive about. It’s pushing further and further out. Auckland’s becoming a more gentrified area with improvement in the quality of the homes, and values increasing for a broader percentage of the population.
“The negative is that it pushes people who can’t afford those homes further and further out. It’s not so good for lower-income people who can’t afford to buy those homes. People who perform productive roles can’t afford to live in houses close to where they work. In the next boom, Otahuhu will become completely gentrified.”
8. A GLOBAL BUSINESS WORLD
Technology and the digital age have made it possible to live anywhere in the world and do business with ease.
Ashley: “Probably for the first time in the history of our country, and this is particularly true of Auckland, you can do anything you would once have had to go overseas to do. You might want to go to London, New York or Sydney for some things but you don’t have to anymore. The world is a smaller place. You can operate your business just as successfully here as in any other part of the world.”
9. A LOCAL, EUROPEAN VIBE
The Unitary Plan facilitates more compact, medium-density, European-style hubs where everything is easily accessed.
Mark: “One of the most exciting things for me is the possibility of creating a more European rather than US style of city. if you look at Houston and LA, for example, with their massive freeways and sprawling suburbia, it’s not my preferred way of living. I much prefer East Coast US or European cities where you have these medium-density cities with neighbourhood bars and restaurants that cater to the locals, where you have the facilities you need. Everything is in easy walking distance. You don’t need cars, especially when you have a great transport system. You can jump on the light rail, grab an Uber and get to where you need to go. I’m excited about that.
“In Pt Chevalier, where I live, we have that already to a degree. There are great bars and restaurants within walking distance, an excellent library, golf course, and parks. We’re missing a swimming pool but we do have a beach.”
10. CHALLENGES ARE BRINGING OPPORTUNITIES
Where there are challenges, there are always opportunities.
Mark: “The changing demographics of city living force us to look at how to incorporate infrastructure for kids going to schools and so forth. With an aging population, what facilities do we need for older people? We’ll start looking at different forms of housing. At the moment, the Cohaus cooperative housing project in Surrey Crescent is interesting helping a wide range of people to afford their own home. There’s also early retirement and pre-retirement living. People will get together with their mates with a bit of money and convert a motel into an owned private social housing set-up. That’s certainly what I want to do.
“The modern approach to housing will change the way we live and societal makeup. Those developments and changes will provide opportunities for entrepreneurs and builders wanting to hook into new housing typologies too.”
Ashley: “Auckland is one of the greatest cities in the world. That’s something to be very positive about. We could live in places like London which has strong house prices, but with their bad climate and congestion, we just wouldn’t want to live there.”
Mark: “Auckland’s housing should be less about good things or bad things, it’s more about change. We’re facing rapid change. At a fundamental level we have to change how we live. If we don’t, we’re going to destroy our children’s lives. I don’t know whether people really understand the full impact of that. It’s apocalyptic. It’s going to happen. It all comes back to the fact that we all have to change on so many different levels.”
Mark Graham is a property commentator and publisher of the Design Guide and the Building Guide.
Ashley Church is a property commentator for OneRoof.