House Prices vs. Income (1998-2012) + Auckland Property Revaluations (2011):
In 2011 New Zealand’s largest property revaluation was conducted in Auckland, by its City Council (Ruiz). The info graphic produced from the council’s results shows a range of scenarios relating to the house prices. The general trend shown was certainly an increase in house prices on average about 5 to 15% (Ruiz). Less central areas of Auckland such as the western suburbs of Kelston and Te Atutu, overall all saw decreases in property prices, proving that not all property value is rising (Ruiz). Average Auckland house prices have grown to amount to 6-7 times the mean annual income, in comparison to Wellington, which is 5-6 and Waikato about 4-5 times mean annual income (Alanah Eriksen). In the 14 years from 1998 to 2012 the average house price in Auckland more than doubled, from $231,000 to $504,000, in the same time period the average annual income rose from $47,000 to $73,000 (Alanah Eriksen). Comparing the changes we see that over the 14-year period the required annual incomes to afford a house in Auckland jumped from 4.9 years to 6.9 years. Other areas of New Zealand were certainly not as bad as what was seen in Auckland but all followed the same general trends with the most affordable homes in Southland and the middle to lower North Island, still amounting to about 3-4 annual incomes (Alanah Eriksen). ASB economist Jane Turner said house prices had been higher, relative to incomes, since before the global financial crisis in 2008 because of supply constraints (Alanah Eriksen).
Although this information says that houses are becoming less affordable, especially in Auckland, sale volumes have continued to increase with a huge increase of 16% of national sales volumes in just one month (Gibson). According to the Real Estate Institute of New Zealand in this month, 252 properties sold for $1 million-plus, 912 for $600,000 to $999,999, 1507 for $400,000 to $599,999 and 3364 for less than $400,000, with only 1110 (18.4%) of these being sold by auction (Alanah Eriksen). ANZ senior economist Sharon Zollner says interest rates are likely to stay down because the Reserve Bank is content to remain on the sidelines as rising house prices are not flowing through into economic activity or broadening inflationary pressure (Alanah Eriksen). Though house affordability is clearly decreasing the market is forcing people to pay more than they should, the government is working to control this through multiple solutions hoping to increase the supply of housing and in turn make it more affordable. Government intervention has been used to speed up building consent processes to free up land for houses, other action from the government has allowed private sector groups to replace housing New Zealand as providers of social housing, their tenants will receive the same taxpayer subsidies as state housing tenants, the remaining rent will be paid by the government to the private providers (Alanah Eriksen).
With such a large portion of the increased sales volumes being in cheap housing, it could be an area for Welly Real Estate to focus on. Especially with the new laws allowing for private providers of social housing, this could be a relatively new market for Welly Real Estate to expand into and make use of the large sales volumes.
Even with the decrease in affordability people are paying far higher prices than they should be for housing. This phenomenon is exaggerated particularly in central areas like that of downtown Auckland. Welly Real Estate could possibly capitalize on the fact that people are being forced to pay almost any price to be able to live in the areas they would like.
WORKS CITED Alanah Eriksen, Tristan Calwell, Claudia Ruiz. Infographic: Home affordability vs income. 23 May 2013. 06 April 2014 . Gibson, Anne. Big jump in house prices. 11 September 2012. 06 April 2014 . Ruiz, Claudia. Infographic: Auckland property revaluations. 06 September 2012. 06 April 2014 .
http://www.nzherald.co.nz/property-infographics/news/article.cfm?c_id=1503298&objectid=10836653
ReplyDeleteHouse Prices vs. Income (1998-2012) + Auckland Property Revaluations (2011):
ReplyDeleteIn 2011 New Zealand’s largest property revaluation was conducted in Auckland, by its City Council (Ruiz). The info graphic produced from the council’s results shows a range of scenarios relating to the house prices. The general trend shown was certainly an increase in house prices on average about 5 to 15% (Ruiz). Less central areas of Auckland such as the western suburbs of Kelston and Te Atutu, overall all saw decreases in property prices, proving that not all property value is rising (Ruiz). Average Auckland house prices have grown to amount to 6-7 times the mean annual income, in comparison to Wellington, which is 5-6 and Waikato about 4-5 times mean annual income (Alanah Eriksen). In the 14 years from 1998 to 2012 the average house price in Auckland more than doubled, from $231,000 to $504,000, in the same time period the average annual income rose from $47,000 to $73,000 (Alanah Eriksen). Comparing the changes we see that over the 14-year period the required annual incomes to afford a house in Auckland jumped from 4.9 years to 6.9 years. Other areas of New Zealand were certainly not as bad as what was seen in Auckland but all followed the same general trends with the most affordable homes in Southland and the middle to lower North Island, still amounting to about 3-4 annual incomes (Alanah Eriksen). ASB economist Jane Turner said house prices had been higher, relative to incomes, since before the global financial crisis in 2008 because of supply constraints (Alanah Eriksen).
Although this information says that houses are becoming less affordable, especially in Auckland, sale volumes have continued to increase with a huge increase of 16% of national sales volumes in just one month (Gibson). According to the Real Estate Institute of New Zealand in this month, 252 properties sold for $1 million-plus, 912 for $600,000 to $999,999, 1507 for $400,000 to $599,999 and 3364 for less than $400,000, with only 1110 (18.4%) of these being sold by auction (Alanah Eriksen). ANZ senior economist Sharon Zollner says interest rates are likely to stay down because the Reserve Bank is content to remain on the sidelines as rising house prices are not flowing through into economic activity or broadening inflationary pressure (Alanah Eriksen). Though house affordability is clearly decreasing the market is forcing people to pay more than they should, the government is working to control this through multiple solutions hoping to increase the supply of housing and in turn make it more affordable. Government intervention has been used to speed up building consent processes to free up land for houses, other action from the government has allowed private sector groups to replace housing New Zealand as providers of social housing, their tenants will receive the same taxpayer subsidies as state housing tenants, the remaining rent will be paid by the government to the private providers (Alanah Eriksen).
With such a large portion of the increased sales volumes being in cheap housing, it could be an area for Welly Real Estate to focus on. Especially with the new laws allowing for private providers of social housing, this could be a relatively new market for Welly Real Estate to expand into and make use of the large sales volumes.
Even with the decrease in affordability people are paying far higher prices than they should be for housing. This phenomenon is exaggerated particularly in central areas like that of downtown Auckland. Welly Real Estate could possibly capitalize on the fact that people are being forced to pay almost any price to be able to live in the areas they would like.
WORKS CITED
Alanah Eriksen, Tristan Calwell, Claudia Ruiz. Infographic: Home affordability vs income. 23 May 2013. 06 April 2014 .
Gibson, Anne. Big jump in house prices. 11 September 2012. 06 April 2014 .
Ruiz, Claudia. Infographic: Auckland property revaluations. 06 September 2012. 06 April 2014 .
- O L I V E R W O O L L E Y.