Property prices in Auckland may finally be falling, with the median house price in the city dropping $20,000 last month according to the Real Estate Institute of New Zealand (REINZ). With data from Barfoot & Thompson showing a similar trend and Finance Minister Bill English raising the possibility of a long-term correction, first-home buyers in the city could finally be getting some relief. With the national median sales price rising by $15,000 over the same period, the gap in New Zealand's two-speed market may be tightening.
According to the latest figures from REINZ, the Auckland region's median price fell from $755,000 in June to $735,000 last month, down $20,000 or 2.65 percent. Prices fell by a massive 10 percent in Auckland City and 4 percent in Metro Auckland, with values rising elsewhere across the region. While the median price still increased by $125,000 or 21 percent over the year, some analysts think this could be the start of a significant correction.
According to English in his address to the Herald's Mood of the Boardroom breakfast, "There will be less expectation of demand controls once Auckland prices stop rising and maybe fall, which has happened in every other housing market which has risen as fast as this one... This is a market that has been messed up by poor planning and we will continue to do what we have to do, deepening our relationship with the people at Auckland Council, to ensure supply can respond to changes in demand."
According to REINZ, the median price in the regions has increased by 3.3 percent over the same period: "The latest monthly report from the Real Estate Institute of New Zealand shows exceptionally strong sales volumes for midwinter, with very strong year-on-year growth in the top half of the North Island and Central Otago Lakes in particular." There is anecdotal evidence of Aucklanders buying property in these areas, both as investors and owner occupiers.
The national median price did not follow the same trend, giving weight to the idea that the Auckland market is losing pressure. According to REINZ data, the national median house price was $465,000 in July, an increase of $49,000 from the year before and $15,000 from June. Auckland still recorded the biggest price increase of the year at 21 percent, however, followed by Northland at 16 percent and Southland at 15 percent. Nelson/Marlborough recorded the largest percentage increase in median price over the month at 8 percent, followed by Otago with 7 percent and Hawkes Bay with 4 percent.
Dropping prices in Auckland could be a sign of things to come, with 86 new Special Housing Areas (SHAs) already approved for the city as a way to increase housing supply. According to New Zealand Mortgages & Securities director James Kellow, this will make a huge difference to supply levels and prices in coming years, with the last two approved SHAs able to deliver 1,800 new houses alone and all 86 SHAs providing up to 45,000 new houses in the city.