One million dollars isn’t what it used to be when it comes to owning property.

That being said, the $1 million figure still carries an outsize significance for many people, says CoreLogic research head Nick Goodall in the housing analytics company’s latest Pulse article.

Goodall says looking at stock levels instead of recent sales tells an interesting story in the $1 million plus housing markets.

Suburb-level data, using estimated median values for each area, based on CoreLogic’s Automated Valuation Model (AVM), provides a likely price where that property to sell now. These AVMs are used by banks in the mortgage lending process and are available for 97 per cent of residential property across New Zealand.

“Once a minimum size filter of 200 existing properties for each area is applied, we are looking at 1,191 suburbs across the country, with 337 of those having a current median value of at least $1 million; or in other words about 28 per cent of suburbs across the country are in the $1 million plus ‘club’.

“There are no surprises that Auckland has 167 (50 per cent) of those suburbs, which equates to 70 per cent of all suburbs across the city. Put another way, seven in every 10 Auckland suburbs has a median property value of $1 million plus, and the very top end of the spectrum includes suburbs such as Herne Bay, Saint Marys Bay, Westmere and Remuera.”

But Goodall says in terms of the share of suburbs with a median value of $1 million-plus (and also a reasonable number of $1 million-plus suburbs), Auckland isn’t at the top of the list.

That’s actually Queenstown, at 89 per cent, and Western Bay of Plenty, at 71 per cent. In Queenstown’s case, the generally high level of property values makes it inevitable that a large share of suburbs would sit in the $1 million plus bracket, and for Western Bay of Plenty a key driver is simply the composition of the property stock (lifestyle blocks which are larger and higher value) account for around 35 per cent of properties in that area, versus less than 10 per cent nationally.

Waipa, Waikato, Waimakariri and Tasman also have relatively high shares of lifestyle properties at about 25 per cent or more, which helps explain their presence, while Taupō is a popular, and expensive, property market in general with plenty of holiday homes, with Wellington city and Christchurch also featuring due to larger size and presence of well-established, upmarket areas.

Auckland on top

When looked at in purely sales terms (contract date since June 1), Goodall says it’s no surprise to see that many of the $1 million-plus deals have been in the ‘usual suspect’ areas of Auckland, Wellington, Christchurch and Queenstown.

Auckland accounted for 52 per cent of all $1 million-plus sales across the country in the past three months, with about half of that figure coming in just two sub-markets; Auckland City and North Shore, markets with some very sought-after suburbs.

Meanwhile, Christchurch accounts for about seven per cent of all $1 million-plus sales recently, with four per cent in Queenstown. “That figure may not seem particularly high for an expensive area such as Queenstown, but when you consider it only has about 0.6 per cent of the country’s total stock of dwellings, it certainly punches above its weight in terms of $1 million-plus sales activity,” Goodall says.

Wellington City also accounts for just over four per cent of $1 million plus-sales of late, while other main centres such as Hamilton and Tauranga also feature on the list.

But other, smaller areas with decent levels of $1 million-plus sales that might not necessarily spring to mind straight away include Waipa, Thames-Coromandel, Western Bay of Plenty, Taupō, and Selwyn near Christchurch. Goodall says in some cases those areas are heavy with lifestyle blocks or large detached houses on sizeable sections, while others are popular holiday/retirement locations with high-value housing.

Threshold changes

The rise in nominal property values over time means that the $1 million ‘barrier’ doesn’t mean as much as it did in the past, Goodall says.

“That said, it’s still a useful threshold to look at, and it’s another way of showing how stretched housing affordability really is for the average household in key urban markets such as Auckland, but also in areas such as the Waikato region and Queenstown.”

He says the Reserve Bank’s new debt-to-income ratio caps for mortgage lending will have an important role to play in providing some sort of restraint for house prices over the medium to long term.

“But ultimately it’s about getting a higher physical supply of property in relation to demand, and on that front, it’s certainly been encouraging to see the government pushing hard – with measures such as forcing councils to designate enough land for 30 years of development.”