The Auckland property market is taking a much-needed rest, with prices starting to stall in the city despite strong regional growth. While Auckland still enjoyed significant price growth on an annual basis, prices have risen slower than expected over the last month. According to the latest QV House Price Index, Auckland property prices increased by 2.1 percent in November results, compared to a national increase of 1.4 percent.
The average Auckland house value in November was $918,153, a 24 percent increase over the year, 7.3 percent increase over the quarter, and 2.1 percent increase over the month. While prices are still rising in most parts of the city, growth is slower than the month before and analysts are expecting cooler conditions to remain. Even though the national average house price is much smaller at $555,729, the gap in New Zealand's two-speed market may be starting to shrink.
The slowdown in growth has been partially attributed to changes in loan-to-value ratio (LVR) rules, with more building consents also increasing housing supply. According to ANZ's senior economist Sharon Zollner, new changes have "made the data all but impossible to interpret because basically those new measures gave some people an incentive to sell very fast and some people an incentive to buy very fast... An actual slowdown in the market is certainly our prediction -- a slowdown in trend terms but we can't quite separate out what timing volatility is really going on."
Other parts of the country are heating up while Auckland cools down, with regional growth in the North Island particularly strong right now. According to data from QV, prices in Central North Island increased by 31.7 percent over the month, followed by Coromandel with 23.1 percent growth, Gisborne with 8.1 percent growth, Taranaki with 4.1 percent growth, and Waikato with 3.8 percent growth. In Waikato, the average asking price in November rose from $403,640 to $413,067. A new record of $487,025 was recorded in Bay of Plenty, with a new high of $554,303 also recorded in Coromandel.
According to Brendon Skipper, CEO of Realestate.co.nz, “It is significant that the areas where asking prices are at record highs are all within striking distance of Auckland... There have been strong indications over recent months that Aucklanders are house hunting further afield, which is helping to raise the expectations of sellers in these neighbouring regions.” With Auckland slowing down and the regions heating up, the two-speed New Zealand market could finally be starting to level out.
While prices in Auckland still have some room to move, cooling market conditions are certainly no surprise after such a prolonged period of growth. According to Skipper, "I don't think anyone in their right mind would think that was sustainable for the long-term. What we see now is normalising and levelling out... However, I think there has been that normalisation where prices aren't going to see the same sort of increases that they had before."
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