Last week I introduced you to the idea of the economic clock to determine where we are in the cycle and how to tell where we are heading next.
During the week I received an email from realestate.co.nz with the latest property pulse, a publication telling you important sales data from all around New Zealand, including individualised results for metropolitan areas.
What got me so excited was to see that as of May the economic clock had moved into the ’10 o’clock’ position, the reason for this is Auckland has finally had an increase in sales volumes and prices. Whilst it has been argued whether or not Auckland was in a mini boom in recent times due to rising sales prices the number of new listings on the market was still below the previous years. Recently though we have seen 3 months straight of rising listings on the market, plus an increase in sales prices, asking prices and property sales.
In an Auckland Property Investors Association (APIA) interview, Ron Hoy Fong stated he believed a short boom was on its way, beginning in the 2012/13 summer and finishing around 2015. With Auckland’s population forecast to increase by 24 000 people every year and a need for 11-13 000 new dwellings each year and only a third of that being consented, it is easy to agree with him. Auckland has massive demand and very limited supply.
Before we do hit the 12 o’clock mark on the economic clock, we must first see some increase in construction. Remember developers only build when they can make money out of doing so and it takes a long time for the whole process so they will not start until property prices are increasing, which as the data tells you, is now.
Now is an excellent time to go out and buy property to prepare for the boom. Be aware of the ripple effect that will be spreading outwards from the blue chip suburbs of Remuera and Ponsonby. Look for suburbs that have a median house price under the Auckland median sale price of $556 000 as these will prove to be affordable and will create high demand when people are pushed out of the more expensive suburbs.