Record Supply Still Not Enough

Transcription

1 Market Indicators Report Second Half 2017 AUCKLAND RESIDENTIAL DEVELOPMENT REPORT Record Supply Still Not Enough SOTO Meadowbank, Auckland Architect: Monk Mackenzie Developer: Southside Group Accelerating success.

2 O.K.L.A. 3 Kaipiho Lane, Albany, Auckland Architect: Ignite Architects Developer: Kingsman Development O.K.L.A. is a collection of 117 contemporary and refined apartments over six levels with a boutique retail offering at ground floor. Located in the heart of Albany, O.K.L.A. has a choice of 1,2 and 3 bedroom apartments with generous balconies. O.K.L.A. has been inspired by modernist architecture, with an honest, functional and timeless aesthetic, bringing everyday luxury to Albany.

3 Contents Auckland Macro - Economic Factors 1 Auckland Residential Property Indicators 2 Residential Market Overview 3 New Zealand Residential Market 4 Auckland Residential Market 4 colliers.co.nz/find-research Follow us on LinkedIn: Colliers International - New Zealand Follow us on Subscribe on YouTube: ColliersIntNZ

4 Macro-Economic Factors INFLUENCING THE AUCKLAND RESIDENTIAL PROPERTY MARKET POPULATION Population changes adjust the pressures on the housing market. EMPLOYMENT & WAGES Changes in unemployment and wages change a household s willingness to take on more debt. CONSTRUCTION COST Changes in construction and material costs affect sale and land prices. 14 % Increase in annual net migration. AUGUST 2016: 32,187 AUGUST 2017: 36,796 Source: Stats NZ, Permanent & long-term migration by country of residence, citizenship and NZ area (Monthly) 0.4 % JUNE 2016: 5.4% JUNE 2017: 5.0% Source: Stats NZ, Labour Force Status by Sex by Regional Council (Annual-Jun) Decrease in unemployment. 5.8 % Changes in construction and material costs affect sale and land prices. JUNE 2016: 1,928 JUNE 2017: 2,040 Source: Stats NZ, Price Index by Item of Capital Goods; (Base: September Quarter 1999 = 1000) (Quarterly-Mar/Jun/Sep/Dec) FINANCING Changes in mortgage interest rates affect household s ability to repay their mortgage. GOVERNMENT POLICIES Government policy changes alter the supply and demand balance of a housing market. INFRASTRUCTURE Changes in infrastructure and public transport can promote access to the local area and subsequently boost property values. 0.2 % Increase in two-year fixed mortgage interest rates. AUGUST 2016: 5.1% AUGUST 2017: 5.3% June 2017 The Reserve Bank published a consultation paper seeking feedback on serviceability restrictions such as debt to income (DTI), limiting the amount that people can borrow to a multiple of their income. July 2017 The Waterview Tunnel opened. The 2.4km tunnel is a key piece of the Western Ring Route and runs between Point Chevalier and Mount Roskill. Source: RBNZ, New residential mortgage interest rates (average % end of month) Source: RBNZ, Debt to Income limit consultation Source: NZTA 1

5 Residential Property Indicators AUCKLAND SECOND HALF 2017 RESIDENTIAL BUYER TYPES 41 % Multiple property owners MEDIAN RESIDENTIAL SALE PRICE APARTMENTS $ 555,000 12% from a year ago Source: REINZ, Aug % Movers RESIDENCE $924,000 7% from a year ago Source: REINZ, Aug-17 SECTIONS 23 % First home buyers Source: CoreLogic, Sep-17 6% New to market, 5% Re-entry & 2% Other $ 560,000 15% from a year ago Source: REINZ, Aug-17 NEW RESIDENTIAL BUILDING CONSENTS YEAR 12 HIGH 10,265 UNITS RESIDENTIAL MARKET OUTLOOK SURVEY NET POSITIVE 29 % from a year ago AUCKLAND Source: Stats NZ, Building consents by region (Annual-Aug) Source: Colliers International Research Net percentage (optimists minus pessimists) of respondents who expect the median price to increase over the next 12 months, Sep-17 NEW SUPPLY: APARTMENTS PROJECTS 17 Completed Q2-17 AND Q Under Construction 46 Marketing/Design Stage 2017F AND 2018F: 5,033 units (75 projects) 2019F AND 2020F: 5,922 units (62 projects) CURRENT SUPPLY BREAKDOWN CBD CITY FRINGE SUBURBAN 59% 25% 16% SUPPLY BREAKDOWN BY 2020 CBD CITY FRINGE SUBURBAN 53% 25% 22% AVERAGE FLOOR AREA* 62/m 2 to 172/m 2 AVERAGE ASKING PRICE* $9,222/m 2 to $ 13,435/m 2 Depending on typology and location *Average price and area of all individual developments tracked NEW SUPPLY: TERRACED & DETACHED DWELLINGS GROWTH AREAS Hobsonville Point Glen Innes Mount Wellington AVERAGE FLOOR AREA* 107/m 2 to 200/m 2 AVERAGE ASKING PRICE* $5,787/m 2 to $ 10,773/m 2 Depending on typology and location *Average price and area of all individual developments tracked All prices include GST and area based on GFA (internal and balcony area) 2

6 As the market for existing houses and apartments slows, prices have stabilised, but an Auckland public still wary of poor quality home environments and sometimes poor quality construction, are still prepared to pay a premium for a new home. The Peninsula Orakei Bay Village, Auckland Architect: Hulena Architects Developer: Equinox Group The slowing in sales is not indicative of reduced demand. Population growth continues apace. Changes to immigration policy might reduce the number of students and lower-skilled workers, but will have little impact on the number of highly skilled immigrants. The reason for the slow down is less about base demand than pricing. A median house price to median income multiple of around 10, even with very low rates, only allows existing house owners to swap houses with other existing house owners, and does little or nothing for the first home buyer. We do think the median house price will reduce eventually, but by building less expensive homes at scale, not by price reduction of existing properties. How to increase that supply significantly when funding is tight, materials and other costs of construction are high, and all the larger builders are at capacity already, is the problem. New construction firms and techniques as well as new institutional private renters will be required, along with some imaginative thinking around policy, tenure and finance. ALAN MCMAHON National Director Research and Consulting 3

7 New Zealand Residential Market Outlook -20% 0% 20% 40% 60% 80% 100% Queenstown Tauranga/Mt Maunganui Hamilton Nelson Wellington Auckland Napier/Hastings Rotorua Whangarei Dunedin Palmerston North Christchurch New Zealand Overall Source: Colliers International Research Percent of respondents who expect the median price to increase over the next 12 months. Auckland Residential Market Outlook Source: Colliers International Research Net Percent Mar-17 Jun-17 Sep-17 Auckland Apartment Supply Timeline Number of Units Source: Colliers International Research Note: Only completed and units in the construction, marketing or design phase are included. An apartment is classified as a building that has 10 or more residential units stacked horizontally and/ or vertically. Net Percent 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 60% 50% 40% 30% 20% 10% 0% All Dwellings New Apartment CBD City Fringe Suburban 2007 Percent of respondents who expect the median price to increase over the next 12 months Mar-17 Jun-17 Sep-17 Existing Apartment New Terraced & Detached House Future Supply 2017F 2018F 2019F Existing Terraced & Detached House New Zealand Residential Market > > Between June 2016 and June 2017, household debt as a percentage of nominal disposable income increased from 164.4% to 167.8%. > > The value of housing stock increased from $905 billion in March 2016 to $1,031 billion in March 2017, a 14% increase (RBNZ). > > New residential mortgage lending to investors dropped to $1.13 billion in August 2017, a 36% decrease from a year ago. Lending to first time buyers has dropped to $740 million in August 2017, a 3% decrease from a year ago (RBNZ). > > Multiple property owners (investors) are buying 39% of all the residential properties sold, movers 26% and first home buyers 21% (CoreLogic). > > The annual number of new residential building consents increased from 29,627 (Aug-16) to 30,736 (Aug-17), an increase of 3.7% (Stats NZ). > > The annual median price for August 2017 is $510,000 (13% annual increase) for apartments, $530,000 (9% annual increase) for residence and $226,000 (10% annual increase) for sections (REINZ). > > Queenstown, Tauranga/Mt Maunganui and Hamilton are the three centres where the highest proportion of respondents in our September 2017 Residential Market Outlook Survey expect the median price to increase over the next 12 months. Auckland Residential Market > > Multiple property owners (investors) are buying 41% of all the residential properties sold, movers 23% and first home buyers 23% (CoreLogic). > > The annual number of new residential building consents increased from 9,851 (Aug-16) to 10,265 (Aug-17), an increase of 4.2% (Stats NZ). > > The annual median price for August 2017 is $555,000 (12% annual increase) for apartments, $924,000 (7% annual increase) for residence and $560,000 (15% annual increase) for sections (REINZ). > > The mean residential weekly rent in September 2017 is $524 in Auckland City, $467 in Franklin District, $512 in Manukau City, $582 in North Shore City, $489 in Papakura District, $522 in Rodney District and $500 in Waitakere City (MBIE). > > Since our last report (1H2017), 1,059 apartment units (17 projects) have been completed and 1,129 apartment units (20 projects) have been announced. > > The total number of apartment units estimated for completion in 2017 and 2018 is likely to reach around 5,033 units (75 projects), with approximately 5,922 more units in 2019 and 2020 (62 projects). > In 2017, 13 apartment projects were identified that will not proceed under original plans. Eight of these sites are currently being remarketed for sale or have sold, three have been abandoned under current proposals and two have been deferred. > An increasing proportion of respondents to our September 2017 Market Outlook Survey thought median prices in the next 12 months would increase for new apartments and new detached and terraced homes compared to June However, respondents were less optimistic about existing homes. 4

8 Boathouse Bay Snells Beach, Auckland Architect: Crosson Architects Developer: Arabella Lane Limited For more information contact: Alan McMahon National Director Research & Consulting David White Director Consulting Leo Lee Research Manager Elena Christodoulou Research Analyst Emily Duncan Research Analyst Josh Lee Research Co-ordinator Chris Farhi Director Strategic Consulting Caity Pask Senior Analyst Strategic Consulting Colliers International Level 27, SAP Tower 151 Queen St, Auckland Colliers International Research and Consulting offers a range of commercial and residential property solutions: Property Investment Strategies Demand & Supply Studies Market Analysis & Forecasts Feasibility Analysis GIS Spatial Analysis Catchment Analysis Lease Audit & Benchmarking Site Options Analysis Corporate Real Estate Strategy Financial Analysis Business Cases Whilst all care has been taken to provide reasonably accurate information within this report, Colliers International cannot guarantee the validity of all data and information utilised in preparing this research. Accordingly Colliers International New Zealand limited, do not make any representation of warranty, expressed or implied, as to the accuracy or completeness of the content contained herein and no legal liability is to be assumed or implied with respect thereto. All content is Copyright Colliers International New Zealand Limited 2017 and may not be reproduced without expressed permission. Licensed REAA 2008