The Current State Of The Auckland Property Market
The Auckland property market tends to operate in 10-year cycles, going through various stages. The decade begins at the end of a recession stage, moves into a recovery period which peaks around the seventh year and then heads into a decline until the new decade begins, and it starts all over again. This cycle has been pretty consistent for the last 50 years.
Until now.
Never before have we seen the current situation. There are 1.04 million Baby Boomers nearing retirement. In the past, there has been a natural attrition where the previous generation retired from their jobs at 60 to 65 years of age, freeing up their homes for the next generation within 10 years or so.
But Baby Boomers are different. They are working and living longer. That means the same natural attrition just isn’t happening, and Baby Boomers continue to stay in their central Auckland homes for longer. Yes, workers still need to move into the area to take up the available places in the workforce. This combination contributes to the current housing shortage, creating a mini property boom during a time when the market would usually be in decline.
What History Tells Us
The America’s Cup will be here before we know it. After all, it will only be 18 to 24 months before we see the practice sails popping up around our beautiful global city.
Yes, that’s right. New Zealand is a global city. In fact, it’s been ranked as the 12th best in the world. While house prices have jumped significantly for the New Zealand market in recent years, on a global scale, Auckland property prices are low compared to other global cities.
History shows us that the last two times New Zealand has hosted the America’s Cup, waterfront properties have become highly sought after. That meant, if you had a home with a water view, even if it was only a keyhole view, the value of your house increased to some degree.
Within a month of winning the last America’s Cup, any properties that went up for sale on Waiheke Island in excess of $5 million, were immediately snapped up. There simply weren’t enough houses available at the time, to meet the demand.
What Does It Mean For Auckland Property?
It’s pretty clear to say that the America’s Cup is going to impact the Auckland property market once more. If the city had trouble keeping up with demand for housing back in 2013 (when we last hosted the Americas Cup), and there weren’t as many retiring Baby Boomers to contend with, then what’s going to happen next time around in 2021?
Auckland’s central suburbs have a growing shortage of approximately 72,000 properties. Homes are only being built at a rate of 15,000 per year. Yet, migrants will continue to come to Auckland at the rate of 70,000 per year and the Baby Boomers are not freeing up their homes like the generation before them.
We are not creating sufficient land in the inner city nor building enough homes to accommodate all of this. This will result in an upcoming rental and property boom. The impact of the America’s Cup will be the first visual sign of this.
So, now is the time to invest in central Auckland suburbs, especially in those areas with a water view. But you need to be savvy, you need to buy the right kind of property in the right areas to see a good return.
Here at Ronovationz we can help you find the perfect property for a sound investment that will set you and your family up for the future. Get in touch with us today to find out more.