Auckland in the top 10% of international cities for house price growth

Property

House prices in Auckland climbing faster than London, Los Angeles, Tokyo, Melbourne or Sydney

7th Oct 16, 5:02am by Greg Ninness

Auckland has the 14th highest rate of housing price growth out of 150 cities around the world, according to the latest Global Residential Cities Index by international real estate agency Knight Frank.

The Index ranked 150 cities by the movement in their residential property prices between the second quarter of last year and the second quarter of this year, with Auckland coming in at 14th equal place with Tianjin in China with annual price growth of 14.6%.

Wellington also featured in the Index, ranked at 27th place with annual price growth of 10.7%.

That put Auckland in the top 10% of cities worldwide for residential property price growth, putting it just ahead of London which had annual growth of 14.4%.

Other cities with lower residential property price growth than Auckland were Toronto 12.4%, Melbourne 8.2%, Mumbai 6.8%, Tokyo 4.9%, Brisbane 4.3%, Sydney 3.6% and New York 2.1%.

However Auckland's house price growth seems modest compared to the three Chinese cities at the very top of the list, Shenzen with 47.4%, Shanghai 33.8% and Nanjing 31.5%.

Which may help explain why many Chinese migrants to this country think house prices in Auckland seem cheap.

And if the exploding house prices in China seem over the top, think again.

Shenzen's annual house price growth of 47.4% is well down from the annual growth rate of 63% it recorded in the first quarter of this year.

"A number of the municipal governments in China are now introducing a new raft of stringent cooling measures at a local level to dampen sales," Knight Frank said in its commentary on the figures.

"These range from limiting non-locals to single home purchases and tightening rules for local residents in relation to second home purchases."

At the other end of the scale 35 cities posted annual price declines, including Singapore -2.4%, Perth -4.8%, Hong Kong -8.1% and at the bottom of the list was Moscow where residential property prices declined 11.2% in the year to June.

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37 Comments

by Roy1 | 7th Oct 16, 8:22am 1475781760

[Comment removed due to personal abuse. Explainer message sent. Ed]

by Peri | 7th Oct 16, 7:29am 1475778584

These price rises in Auckland and Wellington are nothing to brag about, prices are disconnected from underlying incomes (Ponzi), the rises only speak to the egregiously reckless lending by banks pouring credit into inelastic markets. It is credit-fueled illusion.
Of course when the unsustainable ceases to be sustained, we will once again hear that no one could possibly have seen it coming so as to justify once again the stripping of savers and taxpayers to bail out the banks and speculators.

by moa man | 7th Oct 16, 7:51am 1475779901

If the houses are being bought by cashed up foreign buyers immigrating to NZ, then the underlying income of the locals is not a significant factor in the equation.

by sharetrader | 7th Oct 16, 8:09am 1475780957

the stats show 40% + being brought as investments and the price to income are showing a lot as negative yields.

by CJ099 | 7th Oct 16, 8:18am 1475781538

Yes unfortunately property prices have become completely decoupled from wages, This will gradually kill our economy as no wage earners will be able to afford to live here. And of course sky high property prices = over inflated NZD. Which is also killing our Export market and will start to impact Tourism.

Of course Exports and Tourism are our main economic pillars and we shouldn't be relying on inflated house prices to create GDP growth that's a false economy and one which John Key depends on to give the false impression that were doing well.

by hemihua | 8th Oct 16, 12:16pm 1475882165

I don't think it's necessarily a bad thing that prices are decoupled from wages - we're in a low yield environment everywhere and property is probably the most attractive investment if you're about to retire and don't want your savings wiped out in the next GFC. We have fewer and fewer working people per retiree due to population dynamics (albeit not as bad as some countries due to immigration) - looks like we'll be supporting the oldies in retirement by renting their properties. I really don't blame them, I'd be buying up property too rather than say shares if I was in that age bracket.

As far as affordability of rent goes, I can't see them rising any more than people can afford. Unlike property prices, rents are more ground in reality as cheap debt isn't really a factor. Due to population dynamics (a shift from growth to stabilization) I wouldn't be at all surprised to see yields / interest rates stay as low as they are for a good couple of decades, and therefore property prices to remain high relative to incomes. And as long as I can rent for a reasonable price I really don't care.

by jimmyH | 7th Oct 16, 9:14am 1475784881

DELIBERATELY SOLD OUT

Exactly, we are selling on an international market, in a world where local buyers compete with cashed up internationals for basic housing stock, whether it is the laughable quoted 3% stat or an actual 30%+ ,the top buyers set the level for all others. Housing commodified ,as a speculative vehicle, not as a home to raise a family. The damage done to the next generation of NZ born family makers, is now irreperable. You have been deliberately sold out, whether deliberately, or ideologically, or in "do nothing" ignorance, the outcome is the same. You ,the next generation of NZ born ,family makers, (the ideologicaly driven seldom recognize that it is the family units that principally make the society and nation of people that we are,) yes you will have 30 years of debt slavery ,right throughout your expensive family raising years. I hope we dont get a Tommy Mair incident here. Plenty of very disenchanted people.

by rp | 7th Oct 16, 2:49pm 1475804997

agree jimmyh. but thats not the half of it. they deliberately have sold out our farms to offshore buyers preventing young people in the country buying farms, and living the lifestyle they grew up in

by Uninformed Hillbilly | 7th Oct 16, 8:22pm 1475824968

Yes that is what is happening ,. But who is they ? Is it more they have not stopped it or do you think they activity encouraged it ?
Is staying out of debt the most important play for those under 30?

by tim12 | 8th Oct 16, 3:39pm 1475894371

Globalsiation encourages free trade but not fair trade, NZ small busineses have to compete with large global corporates who borrow money for nothing and bribe governments to regulate us out of business, all under the guise of "free trade" deals.

by r-mc | 7th Oct 16, 1:12pm 1475799176

IF... yes if.
If the houses are being bought by CASHED UP NZ BORN BABY BOOMERS, wanting to retain there four-figured weekly wage when they transition in to retirement in the next few years, or perhaps now, over an above the unconditional smaller three-figured weekly pension provided by the government, to support multiple yearly international holidays, memberships to golf and yacht/boat clubs the latest SUV and the like, then the underlying income of the LOCAL WORKFORCE is not a significant factor in the equation.... ??

That's a global pattern and a largely invisible group in this equation....

by Roger Witherspoon | 7th Oct 16, 8:14am 1475781278

Strange, Auckland ranks as the 2,021th most important place in the world from Zara's point of view, it seems.

The New Zealand launch marks Zara's 93rd market with the one-storey Sylvia Park store based set to offer all of the brand's clothing collections including women's, men's and children's clothing.

Zara, which is part of Inditex Group, has 2,021 stores worldwide and is renowned for its reproduction of designer clothes. It opened its first store in Spain in 1975 and is worth US$10.7 billion (NZ$14.9b).

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=117…

by Queen | 7th Oct 16, 12:19pm 1475795966

just because its the 2,021 store does not mean 2,021 most important place in the world.

by Baywatch | 7th Oct 16, 8:26am 1475782012

Bolderdash ..Auckland is special and we know it. Financial capital of the world and historically more important than London. National and our Prime Minister know this and will encourage prices to rise further. Auckland is too big to fail so stop complaining please.

by CJ099 | 7th Oct 16, 8:54am 1475783661

@ Baywatch; You're either an Estate Agent or very very stupid to believe that!

by Baywatch | 7th Oct 16, 9:00am 1475784038

Friday Funny Hats please

by CJ099 | 7th Oct 16, 9:29am 1475785794

Sorry Baywatch, I wasn't sure if you were being humorous or serious (Tip; Use emoticons) :P. Just I know so many industry professionals who are in the twenties and thirties who can't afford a home here and are very frustrated. Then there are the Estate Agents who will do or say anything to keep driving up house prices.

Plus these extremely high house prices are killing a lot of other industries including my own, which is no laughing matter.

by Baywatch | 7th Oct 16, 10:15am 1475788551

Totally agree, all we have left is humor me thinks. I had to move away from family and friends and my sailing playground. However on the flipside have discovered a a dynamic healthy city, with good outlook. One door opens, another shuts.

by jimmyH | 7th Oct 16, 9:15am 1475784950

Perhaps you need to tune up your sense of humour! Then you can recognize the Sarcasm of Bay watches toungue-in-cheek proposition. In my work, i meet so many Asians of all types, Auckland or NZ is the 4th or 5th option, often only chosen as it is CHEAPER.!

by PocketAces | 7th Oct 16, 9:09am 1475784570

Auckland cheaper for the less wealthy foreigners? That I would have thought obvious.

by two otherguys | 7th Oct 16, 1:50pm 1475801406

also less obstacles to negotiate

by Esprit | 7th Oct 16, 4:54pm 1475812485

Quite.... nobody asking pesky questions about where the money's coming from and what your real intentions are like just about everywhere else.

by economist | 7th Oct 16, 9:31am 1475785870

Ah, I think this has changed since around July, its looks unlikely Auckland will be anywhere near 10% + grow in prices going forward. The Real Estate agents I speak with all say the market has gone flat ie 0%. One told me its the quietest hes seen in a number or years. I asked is it just investors not buying anymore and they said its across the board but good solid homes in good areas are still selling but investor/first home buyers are struggling.

Whether this is now the top of the cycle (with interest rates no longer going down) is too early to tell. Give it a few months. From what I have heard I certainly wouldn't be banking on double digit growth going forward.

by Cowpat | 7th Oct 16, 11:06am 1475791594

Ah economist, is there anything such as a 'plateau' in a real estate market that on every metric is at extremes?

by Donker | 7th Oct 16, 12:18pm 1475795881

A successful national government - where would we be without them

by O.Farr-Kinnell | 7th Oct 16, 1:00pm 1475798454

The National government was seen taking the NZ economy into an airport restroom.......

by sharetrader | 7th Oct 16, 1:58pm 1475801895

Friday funny LOL , is there a cartoon to go with that

by Queen | 7th Oct 16, 12:22pm 1475796150

by muntijaqi | 7th Oct 16, 2:06pm 1475802409

I can't wait to see what NZ's government does to fulfill their duty of "protecting home owner's equity" (as John Key claimed) when so many investors tired of low returns and negative yield decide to cash out.

Hopefully there are plenty of FHB ready to step in encouraged by media and property experts that conveniently (for some) will recommend "to buy now because it's the best moment to buy before prices take off again".

And if FHB are not smart enough, prefer to miss out again or banks are not generous enough to fuel the "back to the new paradigm of property prices always go up (i.e: the property ladder concept)" maybe the government should open the doors and receive with open arms a bunch of experienced Chinese investors. They're easy to find, just ask anyone over there, they have some kind of common mentality also known as herd mentality and they know where the money is.

Here, just go to any fruit market and ask the guy that sells bananas. I'm sure he could give us some tips.
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/…

They've made good merits in Shenzen and Shanghai and maybe they can help us grow our economy as well. That, or they could all jump at the same time and hopefully create some kind of damage to some of our cities so that we can rebuild them and grow even more!

We could then advice poor countries to follow our lead by sharing our secret of wealth creation. Maybe even send to the UN some of our mum and dad investors to explain to those ignorant countries how to be successful.

by Boatman | 7th Oct 16, 2:36pm 1475804173

I wish this was like shares on the NZX where we could sell part of the holding and take the "profit" before the market adjustment

by moa man | 7th Oct 16, 2:51pm 1475805113

Shorting NZD is an option.
ETFS Short NZD Long USD
SNZD:LN
London
http://www.bloomberg.com/quote/SNZD:LN

by keyo_ | 7th Oct 16, 3:21pm 1475806896

Doesn't the LSE have stamp duty for foreigners, or does that not apply since the company is in Jersey?

by kiwimm | 7th Oct 16, 4:39pm 1475811570

No, Jersey is exempt from the 0.5% stamp duty payable on UK domiciled ETFs

by CJ099 | 7th Oct 16, 3:31pm 1475807512

We need to follow Canada's tax example.

West Vancouver seeks higher tax rate for investment properties
http://www.cbc.ca/news/canada/british-columbia/west-vancouver-investmen…

The District of West Vancouver wants to levy a higher property tax on investment properties, but it won't involve tracking vacancies or foreign citizenship.

Councillor Craig Cameron said the idea is much simpler.

"We are proposing a house tax that applies to all houses that somebody owns that are not designated their principal residence."

Cameron says much like Vancouver's vacant home tax, people would have to declare if a home is a principal residence when they pay their property taxes.

But unlike Vancouver's proposal to exempt rented homes and target only those left vacant, West Vancouver's tax would apply to all homes that are not the owner's own principal residence.

"It has nothing to with vacancy," he says.

Cameron says this model would be easier to enforce.
"I think there are great challenges in implementing the vacant home tax.... Where do you draw the line between whether the house is vacant and isn't vacant. Someone who goes away to Palm Springs for three months — is that house vacant or not?

And unlike the province's 15 per cent foreign buyers tax, it has nothing to do with the citizenship of the owner.

by Joe Public | 7th Oct 16, 7:56pm 1475823419

"Which may help explain why many Chinese migrants to this country think house prices in Auckland seem cheap"

Let us not forget foreign students and temp visa workers.
At least 13,500 homes a year sold to foreign students and temp workers out of 50,000 total house sales

by Carlos67 | 8th Oct 16, 8:40am 1475869219

We it may be a strange way of looking at it but my house is currently earning TWICE as much as I am per year. This simply cannot continue and we should brace for higher interest rates and the housing market to hit the fan in the next year or two.

by Patricia | 8th Oct 16, 3:22pm 1475893352

The power of words........ Such a lovely word "growth". It gives you warm fuzzies. But I never realised that that word and the word "bubble" were synonyms......