Property Market Bounces, Lifting Turnover and Selling Prices

A
pril 6, 2011

Media Statement

Property Market Bounces, Lifting Turnover and Selling Prices

Weekly Rentals Increase To All Time High

The Auckland residential property market 'bounced into life' in March, with sales volume reaching their highest level in a month for nearly four years, and the average selling price achieving an all time high of $581,190.

"It was a month's trading that came out of the blue, and exceeded anything we have ever experienced," said Peter Thompson, Managing Director of Barfoot & Thompson.

"Buyers in the over $500,000 category appear to have simultaneously reached the decision that now was the right time to buy, pushing up sales numbers for the month to 1070, 75.7 percent higher than in February and 15.4 percent higher than in March 2010.

"This focus on higher value properties also saw the average selling price for the month exceeding that for February by more than $59,000 and that for March last year by more than $36,000.

"What March's sales activity confirms for us is that the Auckland market is reacting in a different way to the rest of New Zealand.

"The formation of the Auckland region into one city has brought home to people the dynamic growth projected for the region, and the looming shortage of dwellings to house a future population in excess of 2 million people.

"Combined with buyers reaching the conclusion that values are at the bottom of the price cycle, the economy looking likely to rebound in the next 12 months and interest rates at historically low levels, and you have the perfect conditions for people to commit to buying."

Mr Thompson warned against dismissing the leap in prices as simply multimillion dollar homes distorting the average price.

"While in March we sold 14 homes with values in excess of $2 million, compared to 4 in March last year, if we remove the $2 million homes from the figures totally, the average selling price would still have increased to in excess of $560,000.

"I do not believe we are seeing the start of another housing price bubble.

"Rather March may represent when confidence returned to the Auckland housing market with values stabilising.

"I would expect sales in April will follow the normal seasonal trend of the past few years and be lower in volume and average value than those achieved in March."

In March Barfoot & Thompson listed 1551 new properties, in line with the number for February and down 7.2 percent on March last year.

At the end of March the company had 5807 properties on its books, down 4.2 percent on those for February and down 7.3 percent on March last year.

Rentals

In March the average weekly rental increased by $32 on that for February, reaching $434, the highest average weekly total on record.

"The $32 increase in one month is also the highest increase on record.

"When you combine the increase in weekly rents with the rise in property prices, it flags that accommodation availability in Auckland is in short supply.

"The rental increase also coincides with landlords reacting to the new taxation rules around investment property, and firmly fixing their focus on improving the operating return from rents.

In March Barfoot & Thompson rented 816 new properties, which is in line with the number rented in February and in March last year.

Ends

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