Auckland real estate market heats up and OCR cut

Shock announcement from the Reserve bank, the OCR is down to 2.25%.

RBNZ governor Graeme Wheeler says: “The outlook for global growth has deteriorated since the December Monetary Policy Statement, due to weaker growth in China and other emerging markets, and slower growth in Europe.

“This is despite extraordinary monetary accommodation, and further declines in interest rates in several countries. Financial market volatility has increased, reflected in higher credit spreads. Commodity prices remain low.

“Domestically, the dairy sector faces difficult challenges, but domestic growth is expected to be supported by strong inward migration, tourism, a pipeline of construction activity and accommodative monetary policy.

“The trade-weighted exchange rate is more than 4 percent higher than projected in December, and a decline would be appropriate given the weakness in export prices.

“House price inflation in Auckland has moderated in recent months, but house prices remain at high levels and additional housing supply is needed. Housing market pressures have been building in some other regions.”

The property drought may be over as listings are starting to rise as we head into autumn. According to Barfoot & Thompson, while the number of properties the firm had for sale during January was the lowest for 20 years, it entered March with more than 2000 new listings.

So it looks like brighter days are here for buyers as more listings means more choice, and a better chance of getting what you want.

Peter Thompson, the firm’s managing director, says there’s an “extremely high number of properties in the pipeline” for settlement in March and April. The company currently has 3318 properties on its books, the highest monthly figure since March 2015.

Based on its sales, Thompson says the average house price is just over $822,000. While the median price, a more accurate figure, is $738,000.

Thompson says: “While prices are down from their record highs, based on past trends, prices in coming months are most likely to build modestly.

“This trend has occurred over the past nine years, where Auckland house prices have followed a cycle of falling in the first quarter of the year and then rising from autumn on.”

Asking prices rise

Meanwhile average asking prices for Auckland property listed on reached a new record in February, going up by more than $100,000 in 12 months to $866,000.

The ‘average’ asking price is not the same as sale price, but the firm’s Brendon Skipper says the national average asking price in February was $565,861, a hair below the record high of $568,215 set in August last year.

He says Auckland is not alone in seeing record highs for asking prices, so too is Otago, Hawkes Bay and Coromandel.

However, Skipper says average asking prices need to be seen against a background of relatively low inventory.
New listings for February across the country totalled 11,989. Auckland had 4202 new listings, up 1.4 per cent from February 2015.

Busy month

Jonno Ingerson of CoreLogic says the firm has seen an increase in property valuation activity that suggests an increase in sales, and therefore an increase in property values.

He says: “Of course this is only two weeks of data, but the turnaround is dramatic.”

Ingerson says high demand is being driven in part by Kiwis return from Australia. In addition, fewer people are leaving New Zealand.

“Bear in mind that since 1981 March has been the busiest or second busiest sales month of the year,” he says.

“We therefore expect market activity to be strong at this time of the year, usually right through until May. A lack of listings, evident across much of the country, is likely to help push prices up for some time yet.”