Limited action at lower end of market

Auckland’s average sale price has just hit a new record but sales activity is muted - especially at the lower end of the market, the latest Barfoot & Thompson data shows.

Friday, March 3rd 2017, 11:15AM

by Miriam Bell

The Super City’s average sales price reached a record high of $944,574 in February, which tops the previous record set of $943,801 set in October 2016.

It was up by 3.4% on January’s average price of $913,938 and by 14.9% on the average price of $822,024 in February last year.

Barfoot & Thompson director Kiri Barfoot said what is clear from the results is that prices at the top end of the market were not under downward pressure,

“Competition for properties around the $1 million mark was strong, with 187 or a third of all sales in February going for an excess of $1 million.

“Sales numbers for properties sold in excess of $750,000 were also in line with the numbers sold in 2016 and 2015.”

However, it was a different story at the lower end of the market.

Barfoot said sales numbers overall fell to their lowest monthly total in six years.

Sales under $750,000 were down a third on those for 2016 and under half those in 2015, she said.

“The lower number of sales in the under $750,000 price category brought the median price for the month down to $820,000, which is its lowest level since May 2016.”

Auckland’s median price has declined by 3.1% over the last three months, although it is still 11.1% higher than it was at the same time last year.

In February the agency also saw the highest number of new listings it has ever had in a February (2,295).

This, combined with the low number of sales in the month, meant that, at the month’s end, there were 4,546 available listings.

Barfoot said the last time they had more listings on their books was back in 2012 and it means that the choice available to buyers is at its highest in five years.

But there was currently division in the market around the $750,000 mark, she said.

“Above this point sales numbers and prices remain consistent.

“Below it uncertainty has developed as to whether asking prices represent value for money, and sales numbers have fallen.”

Given the lower end of the market has traditionally been popular with investors, this would seem to provide further evidence of the impact of the new investor-focused LVRs on the Auckland market.

ASB economist Kim Mundy said a combination of last year’s investor LVR changes and higher long-term mortgage rates are likely to be weighing on demand.

The data showed that Auckland housing demand remained subdued in February, and slow demand combined with a lift in new listings pushed total inventory levels higher again, she said.

“However, inventory levels remain below historical averages.

“Still-low inventory levels, sluggish growth in housing construction and high population growth suggests there remains some way to go before the Auckland housing market rebalances.”

As a result, ASB expects a floor to remain under Auckland house prices over 2017 – although growth will be slower.

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