Auckland’s average asking price hit yet another record high in June, which left it at $888,493, according to Realestate.co.nz.
But as prices continue to rise, theoretical yields for Auckland property investors continue to drop.
Realestate.co.nz CEO Brendon Skipper said investors buying a house at June’s average price of $888,493 would, theoretically, receive 3.18% yield, based on the average rent in Auckland.
This puts them at the bottom of the yields ladder across all 19 regions in the country and below the national average yield of 3.96%, he said.
“It suggests that Auckland investors are relying on future capital gains rather than rental returns or having to look at other property types when considering their investments.”
Investors looking for yields should look to the region Realestate.co.nz has identified as offering the best returns in the country: Otago – which has an average yield of 7.32%.
However, it seems that many property buyers are already looking away from Auckland.
Skipper said searches on realestate.co.nz for properties in the city have fallen.
The number of users searching Auckland houses “for sale” on realestate.co.nz fell by 19.33% in June, as compared to the same time last year.
Realestate.co.nz also measures engagement and it fell by more than a third across the Auckland region in June, as compared to June 2015.
The fact prices are at an all-time high mean they are almost out of reach for the average income earner, so it could be a turning point for Auckland, Skipper said.
“Nationally, the volume of traffic to our site is comparable across the country for this time of year.
“But it appears buyers are moving away from looking in the Auckland area in favour of other regions.”
For example, searches for properties in Northland, Hamilton, Tauranga and Queenstown were up significantly in June, as compared to the same time last year.
Skipper said it appears Aucklanders still want to stay in relatively close proximity to New Zealand’s biggest city.
“In terms of affordability they are being forced to move even further afield, or they are making lifestyle changes.”
But it is also possible that a greater degree of balance could be returning to many markets around the country.
Realestate.co.nz’s data shows that 15 out of the 19 regions recorded an increase in new listings year-on-year.
Skipper said the message seems to be getting through that, with the shortage of listings and the speed in which properties are selling, it’s a sellers’ market.
“While there is still a shortage of listings this is a positive sign for getting more equilibrium in the marketplace.”
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