The low interest rate-fuelled property boom of the last two years has done most of the damage to Auckland's affordable housing market. Photo / Chris Loufte
The low interest rate-fuelled property boom of the last two years has done most of the damage to Auckland's affordable housing market. Photo / Chris Loufte
The number of properties that could be considered affordable in the city is rapidly shrinking.
Analysis of the new CVS by OneRoof and its data partner Valocity shows there are 172,375properties that have a CV of $1 million or less - a third of the city's total housing stock.
It gets worse when you look at the very bottom of the market. The figures show there are just 65,018 properties with a CV of less than $750,000 - 13% of the total stock - and a fair chunk of those are shoebox apartments in the CBD.
The low interest rate-fuelled property boom of the last two years has done most of the damage to Auckland's affordable housing market, with the city's overall average property value rising $460,000, according to the OneRoof-Valocity Value Index.
A look back to the market in 2017, when the last CVs were issued to Auckland homeowners, throws more light on the subject. In 2017, 296,009 properties had a CV of $1m or less, while 195,031 had a CV of above $1m.
The new CVs show there are a lot more no-go areas for first home buyers: 51 suburbs now have no properties with CVs of less than $1m, compared to 14 in 2017.
Auckland Central has by far the most sub-$750,000 CV properties - a whopping 16,371 - but most of those are one- or two-bed apartments. Buyers looking for an affordable standalone house or unit are best to concentrate their efforts on the South Auckland suburbs of Papatoetoe, Papakura and Pukekohe but they better act fast as the total number of homes in these suburbs with a CV of $750,000 or less has dropped 56 per cent, from 19,207 in 2017 to 8392 now.
The quick erosion of affordable entry points to the Auckland market stands in stark contrast to the boom at the top end of the market.
The number of Auckland properties with CVs of $10 million and above rocketed 120 per cent since the last valuations were issued. Of the 486 residential properties at the very top of the city's housing market, 46 have a CV of between $20m and $50m, up from 19 in 2017, and one has a CV of more than $50m.
The drivers behind the boom at the top and crunch at the bottom are the same – an extended period of ultra-low interest rates with a bit of FOMO thrown in for good measure.
For those who bought in the last two years, when the market was hot, the coming year will also present challenges. Low-interest rates encouraged buyers to stretch themselves beyond limits they might otherwise find comfortable, but rates have already gone up three times in the last six months and the Reserve Bank says the OCR could well reach 3.25 per cent by 2023. That, and the rising cost of living, will put pressure on those with big mortgages.
