Auckland house prices were down last month, but sales remain strong and numbers of listings are at very low levels ahead of the spring buying season.
The city's biggest real estate firm Barfoot & Thompson says its median price for August was $561,500, down 4% on July's median figure, which was itself down 4.8% on the June figure.
However, despite a strong surge in new listings - with the 1710 coming on to the market the most for an August since 2002 - B&T ended the month with just 2999 houses on its books at the end of the month.
That figure is the most B&T has had in three months.
However, based on the the number of sales being made the firm has - according to interest.co.nz calculations - just 10.2 weeks of available inventory, which is a historic low.
B&T accounts for roughly 40% of Auckland house sales and its inventory figures are pretty much in line with the statistics recently reported by Realestate.co.nz, which showed the number of houses available in Auckland at record lows.
During August B&T sold 1200 houses, which is the most it has sold in an August since 2003.
Westpac chief economist Dominick Stephens said the latest figures were possibly "the first sign that the pressure on the Auckland housing market is easing".
"For quite some time the market has been defined by a paucity of properties available for sale, resulting in a moderate number of house sales and very strong price increases.
"However, in August there was a sharp increase in new listings hitting the market."
Stephens said that on a seasonally-adjusted basis the median prices were down 0.9%, while average prices were up 0.4%
"This is a 'step in the right direction' for those who are concerned that house prices are rising too quickly. But it is only a small step.
"The Auckland market had become exceedingly tight, with the stock available for sale hitting decade lows. We would have to see many more months of elevated listings before we could say that the market had normalised," Stephens said.
However, ASB economist Daniel Smith said despite the "small lift" in available housing over the last couple of months, the Auckland market was unlikely to turn around rapidly.
"The fact that sales also rose in August supports our belief that the recent levelling-off in sales was due to supply constraints rather than any drop-off in the level of demand. Any increase in supply is therefore likely to be met with stronger sales activity, which will keep overall supply levels low – and maintain upward pressure on prices," he said.
B&T's average sales price in August was $647,647, which is down by more than $6700 on the July figure and more than $2200 lower than in June.
Managing director Peter Thompson said that the average sales price for Auckland houses had "remained constant" for the past five months
“After a rapid increase in the first quarter of the year, prices have settled down, and there has been no upward pressure on prices for the past two months."
Thompson categorised the market as “ an extremely active market, but with prices restrained.
He said a feature of August’s trading was a drop in the number of homes that sold for in excess of $1 million.
“We sold 118 homes for more than a million during the month, well down from July’s 152 and the 144 in both May and June.
“There was a far greater focus on the under $500,000 market, with 523, or 43.6% of all sales, being in this segment.”
In response to perceived overheated conditions, particularly in Auckland the Reserve Bank announced last month that from October 1 it will be applying so-called "speed limits" on high loan to value lending. See here for articles on LVRs.
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17 Comments
Good , but remember Medians are a somewhat simplistic way of looking at the house price scenario .
By definition half the houses are under this price , and thats a lot of houses under $561k .
It means that the half of all houses sold interest cost with 100% Mortage finance is under $570 per week.
I hold the view that the RBNZ reaction to market price movements due to exogenous factors is a bit of an over- reaction.
Auckland has its own set of issues causing prices to rise , and until these are dealt with , we will continue to have the market reacting to supply constraints
House prices have done well due to lack of supply, NZ economy doing better than many other Western Countries and relative calm globally over the past 4 years. However the dynamic are shifting. Global Interest rates are rising with US tapering being reduced possibly in September. Syria crisis will increase oil prices and add to inflation, a weaker Kiwi will add to inflation on imports. Cheap credit cycle is running out. Obama needs to go to Congress in October to increase the USA Debt so that medicare and pension can be paid otherwise payments will stop, so the debt ceiling need to be raised and agreement between Democrats and Republicans will be another tough one. Overseas events do in large have a effect on NZ house prices and likewise on stock market prices.
Typical reactionary analysis...one day of rain and there's talk of launching the Ark again!!. There will be ups and downs as wiith all the statistics our whole system depends on.
Graphed headlines is what all the markets thirst for, it doesn't matter what sector it is...anything to create a move up or down in perceptions of growth or decline...
Spot betting and predicting the weather are also interesting pass times...
As for the little blip on the Auckland property graph...fill up the pages with inplausible predictions if you will Dominick but it won't change the fundementals underlying the demand and shortfalls in the market itself.
Whatever minimal backward steps the stats will show is only temporary...remember it may rain today but what about tomorrow?
Lots going on in these numbers. Drop in median price probably due to lack of activity in the 1m plus price range and high activity in the under 500k. Lots of new houses to the market probably sellers trying to get a sale before the new LVR ratios kick in. Still got the underlying shortage meaning everything gets snapped up.
Agree with EN, need to look at longer, averaged, trends to get a real idea of what's happening. These B&T surveys are a bit of a waste of time considering the only reflect 40% of the market and are not based on the final price. Best to wait for the REINZ.
New Million Dollar Club
1 Herne Bay $1,709,450
2 St Marys Bay $1,493,700
3 Stanley Point $1,252,750
4 Remuera $1,240,000
5 Westmere $1,225,350
6 Ponsonby $1,211,650
7 Epsom $1,183,000
8 Cambells Bay $1,141,850
9 Devonport $1,108,100
10 Orakei $1,099,500
11 Mission Bay $1,081,300
12 Kohimarama $1,077,550
13 St Heliers $1,072,100
14 Parnell $1,043,900
15 Takapuna $1,036,550
16 Glendowie $1,023,000
Where the blazes is wolly these days?
MIA- serious question what are house prices in Adelaide doing?
Personally- I think the next few months will be a good time for new buyers to get on the ladder. Prices may stay flat with the LVR changes before the inevitable summer frenzy ;)
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