Auckland housing demand picks up

Housing demand in Auckland continued to revive last month, with real estate firm Barfoot & Thompson (B&T) reporting its best month of trading in two years.

Thursday, June 4th 2009, 12:12PM

by The Landlord

Auckland's biggest real estate firm sold 814 properties last month, up 1% from April and 58% higher than in May last year, managing director Peter Thompson said in a statement. The average sale price climbed 6.2% to $533,909, a 12-month high.

"It all adds up to a housing market that is active, confident and stable," Thompson said. "Restricted availability is a factor contributing to the price gains being achieved."

Helping stoke a revival in the property market has been the decline in mortgage rates, with two-year loans falling to an average 5.9% in February this year from 9.6% in March 2008, according to Westpac data.

Low levels of home building activity combined with a pick-up in ne inbound migration is likely to create a housing shortage, which will support prices in the short-term, Westpac says.

At the same time, the government's decision to abandon tax cuts over the next two years underpins the appeal of property as a tax shelter. Property prices may halt their gains, however, Westpac chief economist Brendon O'Donovan said in a report, as longer-term mortgage rates have risen since March and the central bank is close to the bottom of its easing cycle.

"The only positive factor for house prices in late 2009 is expected to be continuing strong net migration," which will stem any decline in prices but isn't yet robust enough to result is sustained increases, O'Donovan said.

B&T listed 1,186 new properties in May, little changed from April and down 14.9% from May 2008.

"There was a noticeable increase in demand for homes in the more established suburbs and we sold 57 homes in the $1 million plus category, the highest number in one month for 18 months," Thompson said.

Rentals weakened in May, with the average weekly rent falling to $379, from $399 in April and the lowest in 19 months.

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