The average asking price of residential properties in Auckland that were advertised on Trade Me Property dropped below $1 million for the first time in nearly four years last month.
The average asking price of Auckland properties advertised on the website was $986,750 in August, a 1.3% drop compared to July and the first time it has been below $1 million since September 2020.
The national average asking price was $818,250 in August, down 0.8% compared to July and down 2.3% compared to August last year.
"We've not seen [national] prices drop to this level since April 2021 and if we keep seeing consecutive falls, as we have done over the last five months, we could see the average price go below $800,000," Trade Me Property customer director Gavin Lloyd said.
"it's going to be interesting to see what happens to prices over the next months as we come into spring.
"September results should be able to give us an indication as to whether we've just endured a difficult winter, or if drops are as a result of a more structural weakness in the housing market," Lloyd said.
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30 Comments
The insane valuation expectations didn't just come out nowhere. LVRs were scrapped during Covid, money printers worked round-the-clock and OCR cut to the floor.
Looking back to May 2021, the government announced a budget with a 37 billion deficit or 44% of GDP. That was on top of billions in new handout packages announced like raffles every other week.
You have to be delusional to believe that those good times will be brought back soon to save the housing economy.
Do you? I mean we've kept it going against all sane logic up to now, why is pushing the boat out a little further out of the question?
I can see some pretty drastic things being done just to 'keep it level' on the basis that we definitely 100% pinky-swear we won't overcook it this time.
"Auckland asking prices that were advertised on Trade Me" .....soon they'll be comparing prices that result from a survey of the price estimates of the local gypsy community.
So what have asking prices got to do with anything? Absolutely nothing, unless you can point to an estabished relationship over, say, the last 30 years, between the asking prices as advertised on Trade Me and the actual realized price if in fact the property does eventually sell?
And isn't Trade Me the last resort of the desperate these days?
And so-called drops in price aren't meaningful in the over-all scheme of things unless there is a notable fall below pre-Covid prices. Price rises during Covid were an anomolous 'false dawn'.
Asking prices dropping on average is the signal that vendors are starting to meet the market and accept that asking 2021 prices gets them no sale. If I sell a car and want $3500 I will ask $5k and expect to get an offer around what I want. Selling a house people seem to expect that someone will offer at or above what they ask, and are somehow offended by offers lower than this because you know, they earned those capital gains through hard work right? (scoff)
There are few rules around RE Negotiation, interestingly Real Estate agents tend to achieve about 2-3% more for their own properties when they sell, mainly because they are willing to wait a bit longer for the buyer to come along to meet their price. Market dynamics matter here.
Put the offer on paper, expect it to be counter offered, be prepared to negotiate hard and walk away.
It wasn't that long ago it felt like almost everything was selling over $1 mil in Auckland. Crappy places in South Auckland were getting well over. Now the average house is asking less!
Obviously this metric can be significantly skewed by all the new terraces though.
- Buy a South Auckland development site for close to $2 mil (this was actually happening!)
- Spend $100k plus on plans / reports / etc
- Mortgage rates go up, build costs go up, house prices go down
- Decide to hold off on building works
- Decide to keep property until market picks up
- Bank sells property at mortgagee sale for $500k
- Walk away owing the bank $1.6 million
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