Boomtown Dunedin or flat-lining Auckland?

Jessica Satherley
Boomtown Dunedin or flat-lining Auckland?

Dunedin’s average property value has risen 3.7% in the first quarter of 2019, following the 11.2% it shot up over 2018.

The Otago metropolis has been the best performing main city for rising property values so far this year, while Auckland has been the weakest with a 0.8% drop.

Furthermore, Dunedin has seen its properties rise in value by 48.8% since 2015, while Auckland’s market has flattened.

This leaves potential property buyers wondering whether to invest in booming Dunedin or to make the most of Auckland’s soft market.

 “We know that Dunedin’s property prices are still much lower than Auckland so any given deposit will go further.  Additionally, Dunedin’s gross rental yield of 4% is higher than Auckland, which is around 2%,” Property Economist at CoreLogic Kelvin Davidson said.

This leaves first time property buyers able to buy in a booming market with a much lower deposit.

The average value of a house in Dunedin over the first quarter of 2019 was $451,199, whereas Auckland’s average value was still over a million, at $1,039,917.

Buying a rental property in Dunedin might end up costing landlords extra fees in renovation though.

“There is a bit of discussion about being a landlord in Dunedin, as you might buy a property and need to insulate it due to the new laws coming in,” Kelvin Davidson said. 

“Therefore, you may have more costs to add onto a property in Dunedin, so the end profit might not be so much different,” he said.

Auckland’s house prices have seen the biggest annual fall since the Global Financial Crisis a decade ago, seeing a -1.5% drop.

However despite the descent, values have effectively plateaued across New Zealand’s largest city over the past two and a half years, CoreLogic’s Head of Research Nick Goodall explains in his report.

Goodall notes that there has been a large decline in Auckland property sales volumes, seeing a 14% drop compared to summer 2018.

“Growth across the rest of New Zealand’s main centres has also shown some moderation, with the exception of Tauranga where values were up by 1.1% according to the monthly index at the end of March,” he added.

The growth rate across overall property values in NZ has only risen by 0.5% in the first quarter of 2019 and by 2.6% annually up until the end of March.

Other main cities that saw a surge in the first quarter of 2019 include Hamilton which rose 1.6%, Tauranga at 1.7% and Wellington at 2.2%.

Investors looking at buying property in Auckland would need to weigh up whether they think now is a good time to buy in the flat market or if prices might continue to fall further.

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