Auckland picked to lead global price growth in high-end real estate
Saturday, 9 December 2023
Auckland’s luxury real estate market is expected to have the highest price growth in the world next year, new Knight Frank research shows.
The international property consultancy’s latest Global Prime Residential Forecast has predicted a 10% price increase at the high end of the city’s market.
That put Auckland in the number one spot out of the 25 cities monitored, and well ahead of Mumbai, where a price increase of 5.5% was forecast.
Dubai, Madrid and Sydney rounded out the top five, each with predicted increases of 5%.
The figure predicted for Auckland was up 5% on the consultancy’s last forecast for the city’s luxury market, which was made six months ago.
Knight Frank head of international residential research Kate Everett-Allen said that despite economic headwinds, its global prime price forecast for next year had increased from 2.1% to 2.5% since mid-year.
One factor driving the positive shift in outlook was that some high-end buyers appeared confident the worst was over, she said.
“On the demand side, with inflation receding and interest rate hikes entering their final chapter, buyer appetite has strengthened in some markets.
“On the supply side, a reluctance among mortgaged households to move, plus high construction costs, persistent labour shortages, and planning delays are contributing to a shortage of new stock entering the market.”
But tslower price growth was looming, due to high interest rates, she said.
“While persistent inflation poses a potential threat to delicate buyer sentiment, the advent of new property cycles is expected to entice opportunistic buyers.
“These investors are likely to seize the initiative, exploring new locations and diverse property sectors.”
While Auckland was the front-runner for price growth next year, the predicted 10% surge was best understood as a market correction, compensating for a previous peak-to-trough dip of 20%, she said.
In the lead-up to the election, the National Party campaigned on a policy that would have resulted in the foreign buyer ban lifted for property sales of over $2 million.
The policy generated considerable international interest in high-end New Zealand property, according to real estate agents.
National’s policy did not make it through the coalition negotiations, and would no longer go ahead, but agents remained optimistic about the outlook for high-end property.
Sotheby’s International Realty managing director Mark Harris said there had been a lull after it was announced the foreign buyers ban would remain in place.
But enquiries were picking up again now as there was clarity about what lay ahead for the market, he said.
“The fact the bright line test will be reduced to two years, and interest deductibility will be reinstated helps, and we are seeing increased interest from Australians and expats returning to New Zealand.
“I think that interest will carry on through next year because it is a fantastic place to have a property, and the outlook is a positive one.”
It would be good if the Government reviewed the rules around foreign buyers in future, as he had a queue of American buyers waiting to see what happened here and in the Unitd States, he said.
Paterson Luxury owner Caleb Paterson said buyers were still a bit hesitant following the election, and the $3.5 million to $7m bracket was quite flat at the moment.
But the $7m-plus bracket was buoyant, with lots of activity and buyers, particularly north of Auckland up to the Bay of Islands, and around Wanaka and Arrowtown in the South Island, he said.
“If National’s foreign buyer policy had gone ahead, more stock would have come on to the market by now, but we are expecting more to come on over the summer period.
“New listings will help facilitate more activity, and better summer weather will allow luxury properties to be showcased more effectively.”
He was optimistic these factors along with post-election stability would help fuel the market, and could lead to higher prices, he said.