The trend for Auckland property prices is clear

by Alistair Helm in


It is often said that a trend needs to be established for at least 2 quarters before you can start to define it as a trend - that is certainly the official wisdom with economic recessions. As for the property market it is often safer to hedge your bets and look to 3 or 4 quarters before saying a trend is definitely a trend.

In the case of the Auckland property market and the movement in property prices I would be confident to say we are seeing a significant and enduring trend of price increases.

The most recent statistics from the Real Estate Institute for August shows that across the wider Auckland region prices set a new high of $505,500 when judged as a median sales price in the month and $547,375 when judged on the more accurate measure of Stratified Price. These prices were up respectively 12% as compared to August 2011.

The media is certainly alert to this trend and I was asked to comment on this subject in the TV One news segment on Sunday. 

I thought I would take the opportunity to present the sales price data in a little more detail to show the trend over the past 3 years and in segmenting Auckland into the main 4 regions.

Just to be clear around the source of property price data. The Real Estate Institute (REINZ) is in my opinion the most valuable data to use as it is collated from actual transactions of unconditional sales in the month making it the most timely data. The data is most often presented as a median price to ensure that extreme priced sales (ie for example $10+m) do not skew the data. In addition and with the assistance of the Reserve Bank they have developed an excellent and far more accurate measure called the Stratified Mean. This price index uses a statistical model to remove the influence of more of one price range of property in key suburbs do not skew the data.

Looking at the wider Auckland region to start with the chart below shows the trend of prices measured as both median and stratified going back to January 2009.

The solid blue line presenting the stratified price shows the first strengthening of prices across the region late in 2010, this trend really became established in July of last year when since then prices have consistently risen by 12% over the period to the current peak of $547,375. The pure median price as shown by the red line shows a slightly earlier take-off point of May of last year when from that period prices have risen a total of 9% to $505,500.

Turning to each of the 4 regions within Auckland the one showing the greatest appreciation in property prices is the North Shore. As shown from the chart below prices have risen by 16% from the starting point of 12 months ago - well ahead of the regional growth of 12%.

The new peak of sales price on the North Shore of Auckland is now $625,173.

Auckland central suburbs is where the majority of interest has been shown in recent months and in this region property prices have certainly been on the move. The August median price peaked at $590,500 up 14% from the start of the trend back in March of last year. The year-on-year comparison for this region does show a very alarming 23% increase but this should be taken cautiously as the chart below shows that August 2011 saw a very significant one-month fall in median price.

South of the city in Manukau property prices have seen a strong trend of increase starting back in March of last year. Over the 17 months prices have risen 8% to $493,000 with a new peak in June at $495,200.

Out in West Auckland the trend in property prices has been somewhat more subdued than in the central and North Shore area. Here in the Waitakere region prices are reaching new levels although August did not see a new peak month. The trend over the past 11 months since the upturn began is a more modest 5% increase to $410,000.