Ray White Now New Zealand - October Edition - Page 18

Nerida Conisbee , Ray White Chief Economist
I doubt there has been a period in any of our lifetimes that so many of us have stuck so close to home for such a prolonged period since the pandemic started . Forced reduction of mobility , working and studying from home , closed borders and a desire for more space have all contributed . All of this has been very bad news for Auckland ’ s city centre but has sparked a new age for our suburbs not seen since inner-urban living began to become popular late last century .
The pandemic has had a clear negative impact on Auckland ’ s city centre . Office vacancy rates in Auckland is now at the highest level in over a decade and will continue to climb as the fall out from fewer people in the office continues . Retail vacancy is also increasing and currently , one in ten shops are vacant . And while residential rents are rising everywhere in New Zealand , it is not the case in Auckland city centre where high levels of building activity and low levels of demand have resulted in falling rents . The longer lockdowns and forced working from home continue , the longer it will take for the city centre to recover .
Meanwhile , we have seen very strong conditions in the suburbs , coming at the expense of our inner urban areas . Many retail strips that were previously seeing low levels of foot traffic have become active again . Suburban office markets have done better in maintaining tenants than in the city centre . As people are no longer so restricted to live close to where they work and being locked down a lot puts a higher price on space , house prices in outer suburban areas that have typically underperformed inner areas , have accelerated more quickly than inner areas .
To calculate how much COVID has made suburban living more desirable , we have taken a look at what has happened to median prices in Auckland ’ s outer suburban areas compared to inner urban areas . The bands we have compared are between 0-5kms from the city centre , 5-15kms and 15kms plus . The comparison we have made is price growth in the 18 months prior to COVID to the 18 months post-pandemic . Consistent with anecdotal changes around higher desirability of outer suburban areas , we have seen a greater pickup in prices outside the 5km radius .