Herald Understand Auckland Price Movements

We are an international World City

Wish others would get this

The Herald today published a piece on Auckland competing with international cities – finally!

From the NZ Herald

Auckland house prices rise faster than Oz

Auckland house price growth is more similar to Sydney, Melbourne or Brisbane, than it is to Wellington or Christchurch.
Auckland’s large population, size and connections to multi-national businesses make it more similar to Melbourne and Sydney than Wellington and Christchurch

Auckland house prices are rising faster than those in all three major Australian cities and the city is now more aligned with major international hubs than the rest of the New Zealand.

The latest NZ Housing and Construction Quarterly from the Ministry of Business, Innovation and Employment showed Auckland heading a chart of house price growth, followed by Sydney then Brisbane and Melbourne.

Bryan Field, the ministry’s modelling and sector trends manager, said Auckland was being driven by unique factors which don’t affect the rest of the country.

“Auckland’s large population, size and connections to multi-national businesses make it more similar to Melbourne and Sydney than Wellington and Christchurch, and the housing market reflects that,” he said. The report stressed Auckland’s unique position.

“While Auckland house prices have decoupled from house prices in the rest of New Zealand, Auckland house price growth follows a similar pattern to the three largest Australian cities, particularly Sydney. This suggests some of the factors driving Auckland house prices are common to large cities across Australasia,” the report said.

Auckland house price growth was more similar to Sydney, Melbourne or Brisbane, than it is to Wellington or Christchurch. Does this suggest that Auckland’s housing market is driven by factors that are unrelated to the rest of the country?” the report asked.

“This could be due to the economic similarities between Auckland and these three Australian cities. All four cities have populations exceeding 1 million, have large central business districts and host many internationally connected businesses. In contrast, no other city in New Zealand has a population exceeding 500,000,” the report said.

Shamubeel Eaqub, NZIER principal economist says while the rest of New Zealand looks to Auckland, Auckland looks gaze is more firmly fixed on Australia and Asia.

Auckland house prices

Rising faster than Sydney, Brisbane Melbourne
• Due to size, population, multi-national business centre
• ‘Decoupled’ from house prices elsewhere in NZ
[Sources: Ministry of Business, Innovation and Employment]

………

Source: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11475400

In short Auckland is New Zealand’s only international World city. Yes we (Auckland) do have our eyes fixed to Australia, Asia and North American and for a very good reason. Auckland has the critical mass, the City Centre (well two), industrial complexes and the two main gate ways to the rest of the world. Yes dairy makes us money but Auckland allows those connections to the world for that dairy to make us that money (export receipts).

This is why things like submissions and blog post will frame arguments around the fact Auckland competes with international cities not other New Zealand cities. It is also the reason why I found/find responses from Government and Auckland Council in planning for a world connected Auckland underwhelming.

We must realise the potential Auckland has and would spread to the rest of New Zealand if we unlocked that potential.

To unlock that potential we need to:

  • Forget publicly “sponsored” innovation hubs as private ones often will out perform them. If we have the basics right with everything else mentioned below innovators will come here naturally (the Parnell private innovation hub being an example)
  • Through planning make sure our zones especially higher density zones are adequate in quantity. Is the City Centre enough, are our Metropolitan Centres and industrial zones enough. Do we have sufficient residential bases to trigger agglomeration effects and support the City Centre, Metropolitan Centres, and industrial zones (the answer is currently NO in the Proposed Auckland Unitary Plan)
  • Is our transport infrastructure able and robust to allow efficient travel of people and freight (the answer to that is NO)
  • Is our telecommunications up to scratch (well yes and is still being heavily invested in)
  • Do we have sufficient amenity (including green spaces) for the population (the answer is Council has this one muddled in that more small parks and plazas scattered everywhere are better than less but bigger centralised open space)
  • Are our Plans like the Auckland Plan and the Proposed Auckland Unitary Plan enablers and give encouragement for “investment” (No as I would argue through the Super Metropolitan Centre debate right now both Plans are disablers not enablers)

All things to bear in mind on why Auckland is unique

2 thoughts on “Herald Understand Auckland Price Movements

  1. Really Ben?

    How about this for a common denominator between the Aussie cities and Auckland house prices.

    They all use the same dysfunctional restrictive planning and zoning methodology that means when demand exceeds supply that the market cannot reply in developer real time to restore the equilibrium.

    The rest of NZ is just an Auckland in the waiting to have over inflated house prices, if given the chance.

    There a plenty of million plus population cities that don’t have high house prices, but then they don’t have restrictive zoning methodology.

    1. Yes really Dale as you might need to read the post again especially the main bullet points I placed at the bottom.

      While the post picked up on Auckland being the gateway and competing with international cities, the bullet points at the bottom illustrate what we need to do to more innovative, competitive, and our housing more affordable

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