KEY POINTS:
It seemed improbable even five years ago, but New Zealand is about to claim its next big first - the million-dollar suburb.
Experts say several areas are racing to the $1 million median house price mark, with the first likely to get there within 12 months.
Sydney has
52 million-dollar suburbs, but with a national median house price of $347,000 and an Auckland one of less than $500,000, finding a Kiwi suburb of streets full of properties topping $1 million is a milestone few have contemplated.
A smattering of areas across the country, such as the tiny but picturesque Northland tourist port of Russell, and Auckland's wild and rugged Waitakere region - which includes elite Cornwallis, Karekare and Piha - have already posted million-dollar medians at least once in the past 12 months but they are not considered reflective of overall performance. This is because they are based on just a handful of sales of high-end properties, which distorts the results.
Instead, Auckland's traditional blue-chip property zones in the eastern suburbs, plus Mt Eden/Epsom and the historic area of Devonport, are pushing to provide the country with its first official seven-digit suburb.
Devonport, which includes expensive Cheltenham and Stanley Bay, twice posted a median house sale price of $800,000-$845,000 in the past 12 months, according to latest Real Estate Institute figures. And all three zones - which include prestigious neighbourhoods such as St Heliers, Remuera, Parnell and Herne Bay - recorded June medians ranging from $700,000 to almost $750,000.
Experts say despite a recent chill in the property market, it is still probable that these few zones will make the symbolic million-dollar mark in the next 12-18 months.
"If the market continues in its present direction there's no reason why it won't," said REINZ president Murray Cleland. "You have to remember that an increase in interest rates doesn't affect that top end of the market. It's the poor guys down at the bottom end that it affects."
Stephen Hart, publisher of Where to live in Auckland, agreed. "The market is as fast as its ever been for good properties," he said. "There tends to be a finite number of good properties in such areas and a lot of people who want to live there."
David Rainbow, one of Bayleys top residential agents, told the Herald on Sunday that he considered Parnell, St Marys Bay and Herne Bay were likely to be the first suburbs to reach the $1 million median mark due to their proximity to the central city - exactly when was harder to predict.
He said: "Expectations are house price growth will slow and possibly
level off in the short to medium [term], although longer term they will continue trending upwards."
Nearly half of Auckland's 28 real estate zones exceed the half-million dollar median mark, despite the city as a whole having a median of $445,000.
The priciest suburbs in last week's REINZ data were: Eastern Suburbs $746,750; Mt Eden/Epsom, $737,500; Devonport area, $700,000; Milford/Takapuna, $645,000; Albany district, $635,000; Eastern Beaches, $568,000; East Coast Bays, $571,000; Upper Harbour, $565,000; Mt Albert area, $543,000; Birkenhead area, $532,000; and Islands of the Gulf, $510,000.
But it is most likely that the first million-dollar suburb will come down to "a case of the usual suspects," said Hart. Although his guide relies on government agency Quotable Value figures, which are based on average house prices, he has come to much the same conclusions about which areas - inevitably in Auckland, New Zealand's biggest city - will rank ahead of the pack.
"We currently have Remuera as number one, Parnell as number two, Epsom as number three, Ponsonby fourth (including St Marys Bay and Herne Bay), then Eastern Bays [Mission Bay, St Heliers, Kohimarama, Glendowie] in fifth place. Devonport is sixth, followed by Takapuna," he said.
Signs of a slight cooling in the housing market showed up in REINZ's June figures, with marginal price drops and sales volumes dipping around the country, contradicting last week's report by Quotable Value that the housing boom was still hot.
REINZ's latest statistics show the market has seen falls in median prices in seven of the 12 nationwide regions surveyed and rises in five, adding to a confused picture.
Institute president Murray Cleland said there was no doubt the market was "easing back", which he attributed to rising interest rates and traditional slow sales in winter months.
But investment property analyst Kieran Trass told the Herald on Sunday that homeowners in blue-chip areas should still feel safe.
"There are no significant signs of a property crash just around the corner," he said.
Property case study
Picture-postcard villas and views are one of the big attractions of Devonport, the historic face of Auckland's North Shore.
Affluent homeowners are attracted to the seaside suburb for many reasons - its fine eateries, the 15-minute ferry service to the CBD, safe streets, and homes of character and charm. It's little wonder million-dollar price-tags are the norm for substantial homes, with significant prices being notched up for properties close to the water - and not necessarily on big sites.
The history of 9 Rata Road, a restored four-bedroom, three-bathroom restored villa at the Cheltenham end of Devonport, shows how prices have escalated in this suburb.
The home was built around 1910 and it was not until 1992 that Quotable Value recorded the property's first sale price as $337,500.
By the time of its next sale four years later, the price had more than doubled to $742,500. In 2003, when it next changed hands, it was a similar story, selling for $1.4 million.
Agents say the villa, now up for tender on July 26, is expected to attract offers of about $2 million this time around.
For more details on this property, go to www.bayleys.co.nz451475
At a glance
* Auckland's eastern suburbs, Mt Eden/Epsom, and parts of Devon- port are racing to become our first million-dollar-median suburbs.
* Parnell, St Mary's Bay and Herne Bay are other top contenders.
* Half of Auckland's zones now have house-price medians of $500,000 or more.
