Auckland house prices at crossroads

Auckland house prices at crossroads

After five months of setting ever increasing record prices, Auckland house prices eased back in August.

“In August, the average price for homes sold was $821,079, a decline of nearly one percent on July’s average price and also below the average prices for June and May,” said Peter Thompson, Managing Director of Barfoot & Thompson.

“The same trend is there in the median price. At $755,000 the median price is $2000 lower than it was in July, and $9000 or 1.2 percent lower than the median price for the previous three months.

“There were signs that the rate of price increase was cooling in June and July, and August’s figures have confirmed that winter has contributed to prices declining.

“We are now at the crossroads in terms of where prices go. With the coming of spring we can expect pressure to go back on prices as factors which have led to record prices in the first place such as low mortgage rates, shortages of supply and demand from a growing population still remain.

“However, countering this is the pressure the Reserve Bank and the Government is applying by way of new rules and regulations to keep a lid on Auckland price increases, and concerns around world-wide economic stability.

“The most likely scenario is that prices will increase modestly in coming months from where they are at present.
“Sales numbers in the month at 1314 were at their highest in an August for more than 15 years, and 44.6 percent higher than in August last year.

“August can be a slow month for sales, but this year it was the third busiest sales month for 16 months.

“August’s average price is 15.4 percent higher than the average price at the same time last year, but making this year-on-year comparison is misleading as it infers prices are continuing to rise, when they are not. Most of the increase that has occurred year-on-year did so in the first four months of the year.

“In applying year-on-year price comparisons over the next quarter also requires care, as last year sales patterns were interrupted by the run in to the 2014 general election.

“The number of new listings in August at 2123 were exceptional, the highest number in any month for more than 10 years.

“In spite of this, the number of available properties at month end at 2957 were only modestly higher than July’s 2802.

“Sales of properties in the million dollar plus category at 375 were the third highest on record, while properties in the under $500,000 category at 14.3 percent of all sales were in line with those for previous months.”

ENDS

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