House price growth slows in Auckland

Residential house price growth in Auckland, New Zealand, slowed in the second half of 2015 but are still higher than where they were at the same time last year.

The latest data show that average price at $822,024 in February was up 1.3% on the average price for January and up 10% year on year while the median price at $738,000 was down 2.9% on January but up 7.5% on last February.

‘While prices are down from their record highs, based on past trends, prices in coming months are most likely to build modestly,’ said Peter Thompson, managing director of agents Barfoot & Thompson.

‘This trend has occurred over the past nine years where Auckland house prices have followed a cycle of falling in the first quarter of the year and then rising from autumn on. We have now had two months of trading where prices have been higher than they were in their equivalent months last year, and in the past that has meant prices have risen throughout the year,’ he explained.

He added that the most significant figures in February’s data were that sales numbers stalled and new listings doubled while the number of properties sold at 698 was the lowest in any month for three years.

‘The reason was that at the start of February the number of properties on the market was at its lowest number for 20 years, and buyers had limited choice. However, as the month progressed more properties were listed, and we finished the month with 2,060 new listings, the highest number in the past six months. There are currently an extremely high number of properties in the pipeline for settlement in March and April,’ Thompson pointed out.

‘At month end, we had 3,318 properties on our books, the highest since March last year, and we anticipate an extremely busy period through autumn. Another factor that affects the average and median sales price in the early part of the year, is the summer break results in a relatively low number of sales in the $1 million plus price category,’ he added.

The data shows that throughout last year, on average, some 332 properties a month were sold in the $1 million plus price category, but in February the sales in this price category was just 187. Sales of properties for under $500,000 in February made up 20.6% of all sales, whereas throughout last year they averaged 14.9% of sales.

Meanwhile, the latest data from Statistics New Zealand show that building activity reached a record high in the last quarter of 2015, with an increase from the previous quarter in Auckland but a decrease in Canterbury.

The total volume of building work rose 2.5% from the previous quarter, with rises of 2.8% for residential buildings and 2.3% for non-residential buildings.

‘This is the most building activity we’ve seen since the series began 26 years ago, with total activity slightly higher than the previous record,’ said Statistics New Zealand business indicators senior manager Neil Kelly.

The actual value of building work put in place in the December 2015 quarter was $4.4 billion, comprising $2.8 billion of residential work and $1.6 billion of non-residential work.

Five of the six regional areas saw increases in the seasonally adjusted value of building work. Auckland was the largest driver of growth in the quarter, while Canterbury was the only area where the value decreased. However, Canterbury still accounted for a quarter of the national total. Auckland accounted for a third.

Auckland saw growth in residential building activity throughout the year, with a resurgence in non-residential growth during the second half of the year while Canterbury saw growth in non-residential building work, especially at the start of the year, but residential work decreased.