Average asking prices take a dive

13 July 2017

Average asking prices take a dive

The Reserve Bank’s lending restrictions appear to be having the desired impact on the New Zealand property market with average asking prices taking a dive on a month ago, according to the latest Trade Me Property Price Index.

Head of Trade Me Property Nigel Jeffries said the average asking price of the typical New Zealand property dropped 1.2 per cent in June to $632,850. “The Loan to Value Restrictions (LVRs) seem to be doing the trick, with the average asking price down for the second month in a row and it’s not looking like it’s heading up any time soon, and certainly not at the pace we’ve got used to.

He said homeowners had no reason to panic. “The average asking price is still up 7.1 per cent on this time last year, but the rate of increase is down from 12 per cent at the start of the year.

“It means the significant capital gains of recent years are slowing down but if you’re looking to buy it will be welcome news that the deposit you require isn’t surging at the insane rates we’ve been seeing.”

Auckland prices back to the future

In Auckland, the average asking price dipped for the second month in a row, down 0.9 per cent in June to $911,000.

Mr Jeffries said the average asking price in the City of Sails was now back to its November 2016 level. “Auckland’s property market has softened considerably in the last six months. Year-on-year growth is falling across the Super City, landing at 7.4 per cent in June after being up 9.6 per cent in May and up 13.4 per cent in November.”

Prices slowing in the provinces

Even the regions, which have been very strong over the last year, slipped back in June. “It shows that it’s not just big cities that are seeing some impact from tighter lending,” Mr Jeffries said. “Excluding our three largest cities, the average asking price was down 0.6 per cent compared to May.”

A new powerhouse region emerges

Mr Jeffries said that behind the national figures several regions continued to perform strongly. “The ‘halo’ regions are still powering on as the Auckland effect continues to ripple out, and Otago has emerged as a powerhouse with the average asking price jumping 50 per cent in the last five years.”

The average asking price in Otago hit a new high of $512,900 in June, and jumped 3.4 per cent since May.

The Waikato also hit a record high in June, with the average asking price in Mooloo country now $530,050 - up 21.9 per cent in the last year and up over 53 per cent in the last five years.

“Homeowners in the Waikato are seeing the Auckland effect take hold, mirroring the impact on the Bay of Plenty,” Mr Jeffries said. “Meanwhile, the Bay appears to be easing back after a frenetic few years.”

Around the regions

Mr Jeffries said average asking prices were up everywhere, except Canterbury where the it fell just 0.1 per cent year-on-year.

"The standout region was Waikato with 21.9 per cent growth, followed by Northland (up 12.5 per cent), Otago (up 11.9 per cent), and Nelson and Wellington (up 11.2 per cent).

“Special mention should go to the West Coast too, with good increases over the last three months and a solid 5.3 per cent increase in June.”

House size no longer determining demand

“In recent months we’ve seen higher demand for small houses as a way to get into the market, but June has bucked the trend with a steady 7 per cent increase in average asking price across all types of houses,” Mr Jeffries said.

“When we look closely at the cities, the story remains the same with buyers not displaying any particular preference for housing types. This is unusual and another sign of the market slowing down as demand settles back.”

Units dip

In keeping with the rest of the property market units appear to be taking a backward step. “Units are usually extremely popular with investors but we’ve seen lending restrictions bite in June,” Mr Jeffries said.

“Nationwide, the average asking price for a unit dropped from $441,140 in May to $418,750 in June to turn in the first year-on-year drop in the last five years.”

In the regions, the average asking price for units fell in Canterbury, Hawke’s Bay, Manawatu, Marlborough, Nelson, Otago and the Taranaki.

Mr Jeffries said apartments had escaped the downward trend. “They’re up 16.1 per cent across the country and a massive 18.6 per cent in Auckland. There are large numbers of apartments coming onto the market in Auckland and they continue to hold strong appeal to both investors and first home buyers.”

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