Market Commentary

Jan 14, 2016

Train and bus stations, shops and hospitality hubs have become the main societal factors behind where people choose to live, according to new research.

The research data from Bayleys indicates these have replaced the previous primary property growth fundamental of simply being the “next affordable suburb” in Auckland’s concentric geographic ring – with the centre point being Queen Street in the heart of the city.

Headlining the picks for this year’s up-and-coming suburbs across metropolitan Auckland are New Lynn, Hobsonville, Central Onehunga and Central Birkenhead.

Bayleys research manager Ian Little says the “hot spot” selections were made on forecast capital growth opportunities over the medium to long term, and not rental yield returns which were driven by a different set of financial dynamics.

Selection is getting harder
Picking these suburbs is, however, becoming an increasingly difficult challenge.

“There are very few, if any, ‘bargain’ suburbs left in greater Auckland," Mr Little says. "Everything has moved considerably up the price-ladder over the past two and-a-half years. The challenge now is to identify which suburbs will outperform the market in the medium to long term.

“In the past few years it has been the city-fringe suburbs of Grey Lynn, Pt Chevalier, Mt Albert, Greenlane/Ellerslie and Orakei which have recorded substantial capital growth. That was predominantly on the back of Auckland’s concentric city fringe ring spreading outward.

“Now however, there is a jump to suburbs further out, with the fundamentals now encompassing social amenities and transport infrastructure.”

Under that criteria, New Lynn, Hobsonville, central Onehunga and Birkenhead come out on top, Mr Little says.

Onehunga the next Ponsonby?
“Onehunga, for example, has long been touted as the next Ponsonby. However, until recently that suggestion was pure fantasy for a multitude of reasons, including primarily that there was a far closer comparison between the likes of Westmere, Pt Chevalier and Grey Lynn, than anything Onehunga has to offer.

“The retail heart of Onehunga has, traditionally, also been somewhat ‘less than salubrious’ in its offerings. That is now changing, particularly with Auckland Council announcing plans to transform the nearby Onehunga waterfront precinct into a harbourside hospitality and retail zone, meaning locals will no longer have to travel into the central city Wynyard/Viaduct/Britomart areas for a night out.

“The Onehunga Wharf development will complement the $30million Onehunga foreshore beach and parkland project which opened earlier this year.

“Adding to the bigger jigsaw, there are still a substantial number of ‘do-up’ villas in the lower part of Onehunga which represent considerable added-value buying opportunities, while further to the east there are large tracts of state houses.

"Those 1940s/50s/60s solidly built homes, usually on large sections of land, are sought after by young couples seeking live-in renovation projects inspired by shows such as The Block NZ.”

New Lynn leads in the west
In West Auckland, Mr Little says residential property values still had room for growth in the New Lynn district within a one kilometre radius of the train station – encompassing Portage Rd to the east, Gardner Ave to the south, Titirangi Rd/Rata St to the west and Rizal Reserve to the north.

“Train services from New Lynn to the CBD are among the best in Auckland and the new Brickworks hospitality precinct in the revamped shopping centre again offers a ‘local’ dining and drinking destination rather than people having to head into the central city as previously,” he says.

Further north, and piggybacking off the success of the Hobsonville Pt master-planned suburb, Mr Little says neighbouring "old" Hobsonville will now benefit from the adjacent social infrastructure built over the past five years – ranging from the new decile-10 Hobsonville Point High School through to opening of the $15 million 3860m² Countdown supermarket in September.

He predicts the current substantial "greenfield" pastures north of Hobsonville Rd – stretching across the motorway connecting West Auckland with the North Shore and then over to the rolling countryside bordered by Brigham Creek Rd linking to state highways 16 and 18 – will be carved up over the coming years and those getting in early will reap long-term benefits.

Birkenhead moves up
Rounding out the hot spot hit-list, Mr Little says on the North Shore, one of the region’s oldest suburbs, Birkenhead – tracing its heritage links back to the early part of the last century – has remained largely undiscovered and is consequently ripe for surpassing standard market growth.

He describes Birkenhead as being a "sleeper" – long overlooked by Forest Hill, Bayswater and inland areas along the East Coast Bays. In recent years, the cheaper, entry-level environs of Hillcrest, Birkdale and Glenfield have all recorded considerable rises in average sales values.

“Yet the community-based fundamentals for Birkenhead central have been consistent over the past decade,” he says.

“It is a main hub for bus services to and from the city to the outer reaches of Beachaven, Birkdale and Glenfield. There are regular ferry services to and from downtown. And it has a vast array of food and beverage options in the town centre, which is well supported by a very pro-active business association.”