A typical Auckland house now costs around $1 million. What's going on?

A recent Herald story informed us that nearly half the homes sold in Auckland went for over $1 million. If you find that shocking, consider what’s been happening. 

• In 2013 the Reserve Bank introduced Loan to Value Restrictions (LVRs). These effectively locked out first-time buyers, who then spent years squirrelling away bigger deposits. This year the LVR rules were relaxed and what happens? A flood of first-time buyers enters the market. 

• We were all locked down at home for months in 2020. As a result, many people decided to change the home they were in. And since the affluent can’t spend their funds on overseas trips, there’s more money available for real estate.

• Interest rates were slashed post-Covid to prevent an economic slump. The flood of cheap money has been on-lent by banks and used to bid up house prices.



• The government has ruled out a capital gains tax and wealth tax.

Now let’s look at things from a different perspective.

• You can still buy a house for well under the average price. The flipside of that sensationalist headline in the Herald is that half of all houses sell for under $1 million.

• Private developers and Kainga Ora are frantically building more houses following the new guidelines in the Auckland Unitary Plan. Many of these new homes are pitched below $650K, to make them eligible for first-time buyer grants from the government.

• Low interest rates are keeping monthly repayments down, so borrowers can afford bigger mortgages.

• If you’re looking to buy your first house, remember it’s unlikely to be your last house. Don’t hang out for the perfect property in your dream suburb – be realistic. Get somewhere that ticks most of the boxes, buy it and grow your equity. 

This year we’ve helped record numbers of first-time buyers secure homes. It’s been a pleasure working with them. 

If you’re looking to buy, we’ll help you find a way.