Auckland Housing Market Bucks The Trend

Monday 29 October 2007

Auckland Housing Market Bucks The Trend As House Sales Down

House sales fell sharply during the September quarter but prices continued to hold up according to the latest Mike Pero Mortgages-Infometrics Property Cycle Indicator (PCI).

"House prices rose 12 per cent over the year ended September," says Jeff Staniland, Chief Executive Officer at Mike Pero Mortgages. "The number of houses sold, however, was 24 percent down on a year earlier and 20 percent lower than the June quarter when adjusted for seasonal effects."

The third part of the PCI indicator ­ the average time taken for a house to sell ­ was relatively unchanged at 32 days and up just one day on a year earlier.

Nationally, the October quarter PCI was just 0.37, down from the June figure of 5.42.

"Despite the sharp dip in sales, the combination of double-digit house price inflation and a low average number of days to sell kept housing market momentum in the positive in the September quarter," says Jeff Staniland.

"The Auckland market once again has showed resilience over the September quarter. At positive 3.43 the Auckland market has the highest PCI in the country as a result of strong house price growth and a low average number of days to sell property."

"Market momentum also remains positive in Northland due to hefty house price growth while at the other end of the country Southland maintained a positive momentum for the fourth straight quarter, buoyed by prices rising 28 percent over the previous year." "Our brokers have noticed the market has quietened somewhat and their clients are tending to be more careful before they purchase. There appears to be pressure on prices at the top end of the market, but there is still a good supply of people wanting to buy their own home and with realistic goals and good advice this is achievable."

There is also market talk of interest rates going up in the next quarter although there has been some variability in home-lending rates over the September quarter as a result of credit market uncertainty.

"Before making any decisions we continue to advise all potential home-buyers to talk to a Mike Pero Mortgages broker for the best in trusted and unbiased advice," he concludes.

Auckland market summary The Auckland property market has the highest Indicator reading in the country, thanks to strong house price growth (13% pa) and a low average number of days to sell property (31 days). However, a 24% pa fall in house sales has led to a deceleration in the market's momentum. Further easing in net migration will see momentum in Auckland slow further.

Wellington market summary Momentum in the Wellington property market turned negative for only the second time in the last two years in the September quarter, on the back of a fall in house sales (-19%pa) and a slowdown in house price growth (from 16% pa in June to 13% in September).

The recent pick-up in residential building activity (up 43% pa) will help to further suppress price growth in the Wellington region. Canterbury/Westland The property market's momentum slid into negative territory in Canterbury/Westland over the September quarter, as a result of a 24% pa fall in house sales. House price growth remains elevated at 14% pa. A high exchange rate will weigh down exporters in the region, further reducing demand for property over the next six months.

Supporting documents A PDF of the October Quarter PCI Newsletter and of this media release.

ENDS

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