There are renewed signs that the high-pressure Auckland housing market is easing, with prices up just 0.5 percent in July and a sharp reduction in sales volumes recorded. While the city still recorded 12 percent growth for the year, the market is in a very different place than it was nine months ago. Despite a continued shortage of supply and a sharp rise in population, we may be witnessing an end to the Auckland housing boom.
According to new data from the Real Estate Institute of New Zealand (REINZ), the median house price in Auckland was $825,000 in July, up from $821,000 in June. While this slight increase is small consolation for those saving for a first home, flattening growth rates are being seen by many as a sign of things to come. While it's easy to blame slow growth on the sluggish winter market, Auckland recorded the lowest growth rate of any region.
Despite low price growth, Auckland still managed to record new residential price highs in July, as did the Northland, Waikato/Bay of Plenty, and Manawatu/Whanganui regions. Northland reached a record median price of $376,000, up 4.4 percent on June. Waikato/Bay of Plenty recorded its eighth record median price in nine months at $450,000, up 2.7 percent on June. The Manawatu/Whanganui region's median price was $265,000, up 6.4 percent on June.
The slowing rate of house price growth in Auckland is easy to see in retrospect, with 12 percent growth today compared to 21 percent growth recorded between July 2014 and July 2015. The annual growth rate peaked in the year ending September 2015, with house prices going up a massive 25.4 percent during that 12 month period. While prices are unlikely to fall sharply any time soon, slowing conditions may finally make it easier for first-home buyers to enter the market.
Along with reduced growth, the Auckland market is also experiencing a strong reduction in sales volumes. The number of homes being sold by REINZ members has dropped sharply, with just 2520 Auckland homes selling unconditionally in July compared to 2737 in June and 3160 in July last year. This matches a larger national trend, with 7299 homes sold in New Zealand in July, compared with 7864 in June and 8121 in July last year. According to REINZ, supply levels are an ongoing issue across the country: "Inventory continues to fall rapidly nationwide, with a 33 per cent decline in properties available for sale year-on-year and six regions seeing falls of greater than 40 per cent."
According to REINZ spokesman Bryan Thomson, "Prices continue to rise in many regions showing that demand is still firm... Sales volumes remain below previous periods, as the continued shortage of supply impacts buyers, who are struggling to find properties to buy... We will watch market reaction with interest as the expected increase in listing numbers during the spring and summer selling period become available and the market assesses the impact of the recently announced LVR rule changes, the approval or otherwise of the Auckland Unitary Plan and a possible interest rate cut."
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