Residential vs. Commercial Property Trends
Jun 20, 2017
Residential vs. Commercial Property Trends
The media coverage of New Zealand (and specifically Auckland) house prices has ramped up even further recently, with the news that the Auckland residential house prices are now officially in decline. ASB economists confirmed that “Auckland prices were down 0.7% in the month, taking the annual pace of house price inflation there to just 1.8% - that’s the lowest annual increase since May 2011 which was also 1.8%”
The reasons for this are further analysed in the below article, however whilst the parallels for the commercial property investment market are certainly there (such as the effect of increased borrowing costs and lack of available development funding) we are noticing the one key driver which still very much exists for well-located investment property is still present – the need for purchasers to find a home for their money. With a lack of alternatives for investment, prices for good quality investment property have continued to strengthen (and in some cases yields are still compressing further)
As appears to be the case with residential property, it is likely this further accentuates a two-tier market, whereby quality properties are still selling (and selling well) with purchasers not willing or able to take on riskier or lower quality assets. In any case it makes for an interestingly poised market over the next 6 months (both commercially and residentially)…
Previous Market Commentary: Commercial Property Snippets