First annual Auckland house price fall in a decade
Barfoot & Thompson says the tide is turning towards a buyers’ market for Auckland housing.
The median price Auckland’s largest real estate agency sold houses for in 2018 was down 0.8 percent on 2017 at $836,792 - the first such decline in 10 years, says Barfoot, which accounts for about a third of all residential property sales in the city.
That was despite an 8.1 percent increase in the number of transactions Barfoot booked through the year.
In the month of December, Barfoot sold 504 properties, 25.2 percent fewer than the 674 sold in December 2017.
The average sale price through Barfoot in the year was $929,910, up 0.4 percent on the previous year. Earlier in 2018 it had been tracking 1-2 percent higher than in 2017.
"In the past few months the tide has turned towards it becoming a buyers' market," says managing director Peter Thompson.
“The over-riding market sentiment at present is indecision as to the direction the market is heading.”
He attributes this indecision to a lot of factors, including government-imposed restrictions on purchases by non-New Zealanders, reports of large declines in property prices in major Australian cities, and the potential for a capital gains tax being imposed on investment properties.
Buyers are also being held back by concerns about global economic stability, partly caused by the trade war between the United States and China.
ASB Bank economist Kim Mundy says the Barfoot figures highlight a very soft end to 2018.
“Looking back in time, the 504 sales that took place in December was the lowest number for a December since 2008 when 461 houses sold in Auckland,” Mundy says.
Thompson says vendors prepared to meet the market were the ones achieving sales while those holding out for their asking prices were unsuccessful.
“A stand-out feature for me in 2018’s sales data was the significant increase in the number of sales made in the under-$500,000 category,” Thompson says.
In 2017, such properties accounted for 8.9 percent of total sales; in 2018 they had jumped to 11.4 percent of all sales.
“This increase can be linked directly to the higher number of apartments, terraced housing and townhouses hitting the market, giving first-time buyers and those on limited incomes far better access to property,” he says.
Looking to the future, Barfoot reports 555 new listings of properties for sale, down 2.8 percent on the 571 new listings in December 2017. That takes total stock available to 4,853, an improvement on the 4,160 available at the beginning of 2018.
ASB's Mundy says the burst of activity ahead of the ban on foreign buyers coming into force on Oct. 22 appears to have run its course. She expects ongoing population growth, low mortgage interest rates and the recent easing of loan-to-valuation restrictions to keep a floor under demand in the Auckland housing market.
“These fundamental supports should flow through to prices and limit the extent to which we see any price falls over the year,” she says.
Thompson is warning vendors that new anti-money laundering legislation that came into force this month will mean they will be asked for far more personal information than in the past.