How much housing supply does Auckland have left?

Housing Market Written by Squirrel , Jun 22 2016

If there's one thing that has dominated the headlines lately, it's the Auckland house situation. Whether it's the incredible value growth that has been recorded over the last few months, or the ripple effect that is having on places like Hamilton and Tauranga, the City of Sails can't seem to dodge a headline for even a week.

One of the main topics of discussion in this arena is the level of housing supply; or rather, the lack of it. It's no secret that Auckland has some serious way to go until new builds are reaching high enough volumes to match demand, but do you know just how low the current supply has fallen - and how that might affect your property investment plans?

Bringing back the heat into Auckland

The Real Estate Institute of New Zealand (REINZ) has recently revealed that, for the first time, the median national house price has smashed all previous records and cracked the $500,000 mark, now sitting pretty at $506,000. It was places like the Bay of Plenty and the Waikato that were the driving forces behind this new high, with QV recording a whopping 26.2 per cent year-on-year value gains up to the end of May for Hamilton. Tauranga put in a solid effort too, with 23.1 per cent.

However, the fact is that despite Auckland chugging along behind this rocket-powered growth, at 15.4 per cent gains (which is still nothing to sniff at), the whole reason for the regional power-up is due to Aucklanders. The lack of housing supply and resulting high prices are pushing people out into these more distant towns - investors and first home buyers alike are seeking affordability away from the City of Sails.

Checking the oil level

But just how significant is this Auckland undersupply? The Reserve Bank of New Zealand tells us that residential construction investment increased by 3.5 per cent over 2015, but it doesn't seem to have done much for the housing situation - or at least, not enough.

Despite governmental and private efforts to meet demand, REINZ has found that if the current rate of sale keeps up in Auckland, there would be no more properties available in as little as 10 weeks. Of course, the number of homes on the market is constantly topped up by vendors keen to sell, but this current low level of supply is particularly telling of the high-demand real estate environment of the largest city in New Zealand.

In other cities, this is not quite as apparent. Hawke's Bay and Wellington, for example, only have 8 weeks of supply remaining, but considering the huge amount of demand generated by low interest rates and high immigration, the volumes in Auckland could continue to rapidly decline.

So, what does this mean for investors? It looks like the rollercoaster ride of Auckland values is going to continue its ascent! To make the most of your investment, make sure you get in touch with the mortgage advice team at Squirrel today.

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