The latest QV House Price Index showing the average home value for the old Auckland City Council area has now ticked above the
$1 million mark, so it's no wonder the search for more affordable homes is leading to value rises on the Supercity's outer limits and nearby provincial centres.
I wrote this year of the constant rise of outer suburbs that border the city fringe suburbs. We are seeing value increases as far out as Helensville to the north-west where house prices are up 18 per cent year on year and the average value has now topped half a million dollars. Wellsford values started rising after being flat since 2007, up 16 per cent year on year.
Western suburbs on the urban fringe such as Sunnyvale have seen values rise 6.1 per cent over the past three months. Ranui values are also up 5.7 per cent and the average value in these suburbs has topped half a million dollars. To the south, values in Pukekohe rose 12 per cent over the past three months and the average value is now $520,250; and in the eastern coastal suburb of Maraetai, on the edge of the urban boundary, values have risen 7.2 per cent over the past three months.
For those questioning whether events in Greece or the erratic Chinese stock market will dampen the Auckland housing market, BNZ chief economist Tony Alexander doesn't think it will have a significant impact. He says uncertainty in the Chinese sharemarket may increase interest in "safer" investments outside of China but also points that eight "records" are driving Auckland's housing market:
• Record low interest rates
• High net migration
• A record leap in recognition of Auckland as a global city
• Land pressure
• A bulge of ageing baby boomers looking for investment property to fund their retirement
• Delayed purchasing catch-up by young professionals who had to pay off student loans
• Under-building in the Auckland region
• Record migrant wealth
This latter point is of interest if you look to where new migrant wealth is coming from.
Not only does Alexander point out that Asia has a growing middle class but Immigration New Zealand figures also show there's been exponential growth in the numbers of migrants coming to New Zealand from Asian countries under the Investor and Investor-plus categories, particularly from China.
In 2009 when the Government loosened immigration rules for those bringing more than $1.5 million cash (Investor Category) or more than $10 million cash (Investor Plus Category) to invest in New Zealand, Chinese investors accounted for none of the 10 migrants who moved here in the following 12 months under these categories. But in the year to June, 133 Chinese migrants moved here under the Investor Categories, out of a total of 181.
These migrants can gain permanent residency by spending as few as 44 nights per year in New Zealand for three years as long as they invest their cash here.
Many are reportedly investing in the lucrative Auckland property market to take advantage of the lack of capital gains tax, land tax, and stamp duty and the fact that they can buy the land freehold. Total spending power of these migrants who moved in the past year is close to $500 million.
Alexander expects the combination of factors means it's likely Auckland home values will keep rising until at least the middle of 2017.