Devonport leads in house price see-saw

Hibiscus Coast's Orewa, above, with Silverdale and Whangaparaoa, has had the biggest property price deflation. Photo / Paul Estcourt

Two years on from the heady days of 2007, Devonport has weathered the property bust better than anywhere else in Auckland, notching up an 18.5 per cent sales price increase.

Hardest hit has been the Hibiscus Coast, including Whangaparaoa, Orewa and Silverdale, which recorded a property price deflation of almost 14 per cent in the past two years.

October and November 2007 was the peak of New Zealand's last property boom. In October 2007, the Auckland residential market was frenetic. The average Auckland home sold for $445,000, up more than 11 per cent from the previous year.

It was a sellers' market and auctions were all the rage. Loans were readily available and our only moral pinprick was worrying about how first-time buyers would manage to get a foot on the sure-thing property ladder.

Then things changed. Credit got tighter, economists were gloomier, prices levelled and buyers evaporated. Instead of the average Auckland home being snatched up in less than four weeks, the sales period went out to six and seven weeks plus.

Would-be vendors pulled their houses off the market. Auckland sales dropped from a high of 10,000 to a low of less than 4000 a month.

Everyone prepared themselves for the bursting of the house-price bubble.

Fortunately, the correction to date has not been as apocalyptic as some pundits predicted.

It hasn't exactly been a couple of vintage years for price appreciation, but the Auckland market has fared well according to the most recent Real Estate Institute figures.

The present average sales price is $453,000 - 1.8 per cent higher than two years ago. The average number of days it takes to sell is now only 30, which is close to the record of the previous boom and numbers of sales have increased to 6500 a month, higher than the same time two years ago.

But each of Auckland's suburbs are mini-markets that have weathered the cooler market differently.

Highs and lowsThe Herald on Sunday ranked each of Auckland's suburban areas according to recorded sales price growth from October 2007 to October this year. Although, on average, Auckland has shown a growth of almost 2 per cent during the period, only six areas have risen in price. The other 19 areas have dropped in price value.

Devonport came top by a comfortable margin, having shown an 18.5 per cent price increase over the past two years. In October, Devonport cracked the $800,000-plus average sales price ceiling for the first time, with 94 homes selling collectively for more than $89 million. Not since July 2007 have so many homes sold. However, it hasn't been all plain sailing. Prices were as low as the early $600,000s late last year but growth has been strong since January, increasing more than 33 per cent in the past 10 months alone.

Devonport real estate agent Peter Ayton says while the price figures look good, they've been held up by owners opting to hang on and not sell since the slump started. Sales volumes have been low, Ayton says, "about a third of what we'd average in a normal market". He says volumes are picking up now, with 10 sales for $2 million-$2.5 million since July. Five more have sold for $1.9 million-$2 million this year, most selling since September.

The inner south-eastern suburb of Mt Albert, including Sandringham, Kingsland and Waterview is the runner-up, with a 12.8 per cent appreciation since October 2007.

Prices, number of sales and days to sell all demonstrate buoyant market conditions over the past six months.

Mt Eden/Epsom showed the third-highest appreciation levels. However, this suburb had an earlier-than-most price peak in August/September 2007, when the average price reached more than $700,000. But gains have been consistent this year.

At the other end, Hibiscus Coast has recorded a property price deflation of almost 14 per cent in the past two years.

Sales have increased to more than 200 homes a month but prices remain in the doldrums, with the October average of $440,000 no improvement on the September 2006 price.

Hibiscus Coast real estate agent Jim Jobbins says: "We've got real trouble at the bottom end," because with banks' higher deposit requirements, young couples need to save $70,000 to get into starter homes.

"The rough end of it has had a bad knock. It's a real struggle to sell the cheaper end of it. It's disastrous."

Ellerslie/Panmure and Manurewa were the second and third worst performers with a drop in value of more than 9 per cent since October 2007.

Ellerslie/Panmure even appears to be bucking the current trend of rising prices this year, showing three consecutive months of decline up to October, but homes are selling quicker.

Manurewa is selling almost 300 houses a month, but that is well down on its 500+ a month peak in mid-2007. In June this year, its average price dipped below $300,000 for the first time since March 2007.

* Stephen Hart is the author of Where to Live in Auckland and The Streetwise Homebuyer.