Author: JUNO Magazine. This article was prepared for JUNO Magazine, Winter 2019. 
PDF Version of original article from JUNO Magazine available here.

There’s been a dramatic decline in house prices in many of Australia’s biggest cities. Some speculate that Auckland’s recent slide means it’s headed the same way. CoreLogic’s Ben Speedy compares the two markets.

Plummeting prices in the Sydney housing market are sending shivers down the spines of Auckland home owners, who wonder if they’ll see the same thing happen to their homes’ values.

CoreLogic Head of Country NZ Ben Speedy says the Sydney and Auckland housing markets both saw significant growth in values from 2013 onwards.

“That was driven by more accessible credit, low interest rates, migration, a strong economy, and low unemployment,” Speedy says.

“They were the drivers of property values going up in Sydney – and also the reason property prices went up in New Zealand.” 

Change in house prices in major NZ cities in the year to March 2019 (Source: JUNO Magazine)

CoreLogic’s Australian data shows that since then, property prices have dropped a long way in parts of Australia, including over 12 per cent from the July 2017 peak in Sydney.

Change in house prices in major Australian cities in the year to March 2019 (Source: JUNO Magazine)

But CoreLogic’s Australian data shows that since then, property prices have dropped a long way in parts of Australia, including over 12 per cent from the July 2017 peak in Sydney.

But Speedy says the two property markets are different.

The apartments effect

“A lot of this effect in Sydney is from apartments. A lot of apartments were built in the metropolitan areas of Australia and the economy there has now turned.

“There’s not the demand for those apartments now. People were buying off the plans and then when it came time to settle, they had to make a decision, do they settle, do they still want to purchase that property?” 

Buyers pulled out, leading to a glut on the market and a price drop.

Now, in those metro areas of Sydney and Melbourne, there’s more supply than demand, he says. 

Don’t panic

There are plenty of apartments being built in Auckland too, but nothing to the scale of Sydney or Melbourne. That means less cause for panic, says Speedy.

“We’ve seen a prolonged period of no growth in Auckland and that weakness is likely to continue but, at CoreLogic, we don’t see a crash at this time. 

“There’s still a shortage of property in Auckland, and that should see property prices hold in the near to medium-term,” he says. 

“There’s migration: people still want to come to New Zealand to live, and there’s domestic migration. Unemployment is still really low, and there are lots of opportunities in Auckland.

“Those economic drivers apply, so we’re in a stronger position in New Zealand than Australia is at this point in time.”