Properties find place in the sun
Part Two
SOURCE NZ Herald5.00AM Sunday October 28, 2007By Bruce Morris
But back to Mt Eden/Epsom. If there’s a truism about real estate in Auckland, it is that it is hard to go wrong buying in older, established areas close to the city centre and served by great schools.
When the market slips, you might have to bide your time before reaping a decent capital gain minus all the expenses, but you’ll get there in the end. Mt Eden/Epsom is part of the city’s blue chip property belt.
However, as the statistics show, you don’t have to be surrounded by villas and leafy streets close to Queen St to enjoy capital gain.
In the end, price growth in residential property is fuelled by simple supply and demand. When prices in one suburb get a little ahead of themselves, buyers will resist paying and switch their attention to around the corner and over the hill. The result over time: a flattening in one area and a spurt in the other.
So don’t despair if you own a home in Milford/Takapuna (no increase in median price this year, which, with inflation, effectively means your asset has gone backwards), Onehunga/Penrose or Mt Albert (both up just 5 per cent).
It could have been worse (Devonport is down 3 per cent for the first nine months of 2007) and probably doesn’t mean much more than that the sun may shine on your roof sooner than others once the market turns. The traditional real estate cycle means that everywhere attracts the sun at some stage, assuming a nuclear power station or gang headquarters don’t pop up overnight in the neighbourhood.
The secret is being smart or lucky enough to buy before the heat arrives.
In the first nine months of this year, price growth in Manurewa was at 8 per cent, slightly above the wider Auckland median. But who, in 2003, would have picked Manurewa to be the standout area in Greater Auckland over the next four years? As it happened, low base prices lured investors and first-home buyers, pushing prices up by 76 per cent - more than twice the rate of the eastern suburbs, and nearly twice that of Mt Eden/Epsom.
The issue now is that the clouds are forming over Auckland and the rest of the country as interest rate rises and credit squeezes impact on escalating prices.After five or six years where the seller ruled the roost, the pendulum has swung and it’s now starting to look like a buyer’s market.