Spring surge in average asking prices

5 November 2014

Spring surge in average asking prices

New Zealand property prices surged strongly in October, with the Trade Me Property Price Index up 2.5 per cent month-on-month.

The Property Price Index measures trends in asking prices for residential property listings added to Trade Me Property by real estate agents and private sellers over the previous three months. It provides buyers, sellers and realtors with insights into ‘for sale’ price trends by property type and property size.

Head of Trade Me Property Nigel Jeffries said the rise in asking price was a clear sign that the property market has a spring in its step after a subdued winter. “The October data shows the first significant increase in sellers’ price expectations in six months as the market regains confidence. Up until now it has been slow to spark into life, potentially held back by the September election.”

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According to the Trade Me Property data, the average asking price across all property types in the three months to October was $494,750, a year-on-year increase of 12.2 per cent.

Mr Jeffries said the October 2014 asking price represented a new record high, exceeding the prior peak asking price of $491,050 seen in March 2014. ”Having seen prices edge sideways for the past six months, the market has signalled a confident rise. This represents an overall increase of 23.9 per cent since October 2009.”

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Ups and downs in the regions
Thirteen regions showed an increase in average asking prices, and Mr Jeffries said ten regions showed a quickening pace of year-on-year price inflation compared to September.

“Taranaki and Gisborne again led the growth in average asking price, while there was sustained growth in Canterbury which was up 13 per cent. Hawke’s Bay and Manawatu/Wanganui also experienced double-digit growth. At the other end of the spectrum, Waikato and West Coast were the only regions where average asking prices contracted, down 2 per cent and 6 per cent respectively.”

In the major metropolitan areas, Auckland’s asking price increase dropped down a gear from 10.2 per cent to 9.4 per cent, whilst Wellington remained steady at 6.9 per cent growth. Mr Jeffries said the data from the country’s two major urban centres reflected a “gradual easing” from stronger increases over the past year.

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Asking prices for medium houses hits new peak
Mr Jeffries said there was a significant rise in the price expectation for 3 and 4-bedroom homes as the average price passed the $500,000 level for the first time. “We’ve seen meaty price increases for larger houses over the past year and the price expectation for medium-sized houses has taken off in recent months with 11.9 percent growth in October as compared to a year ago. The average asking price for these properties in Auckland and Christchurch also reached a new record level at $688,700 and $480,700 respectively.”

Smaller properties also continue to see strong growth in average asking price, up 13 per cent year-on-year.

Table 1: Asking prices for houses & YoY changes (Oct 2014 vs Oct 2013)

Apartments push through the $400,000 barrier
Mr Jeffries said the strength of pricing in the apartment sector stood out. “Driven by the volume of apartments in Auckland, the average asking price for apartments broke through the $400,000 barrier for the first time and landed at $405,000, up a very strong 14.6 per cent on a year ago. This shows the strong appeal of compact living as both an investment option and a first step onto the property ladder.”

Table 2: Asking prices for apartments/townhouses/units & YoY changes (Oct 2014 vs Oct 2013)

About the Trade Me Property Price Index
The Index is a new piece of analysis, focused on expected sale price. Listings are from private advertisers and real estate agents.

The Index is produced from data on properties listed on Trade Me Property in the three months leading up to the last day of each period. Each period’s value is a truncated mean of the complete three months’ worth of listings. This is to better reflect trends in property prices rather than month-to-month fluctuations in housing stock.

The Index uses an “80% truncated mean” of the expected sale price. This excludes the upper and lower 10% of listings by price, and averages the expected sale prices of the remaining properties.

It is the first report to provide an insight into ‘for sale’ price trends by type and size of property. Other reports tend to aggregate the property price data across these various properties.

trademe.co.nz/property/price-index/for-sale

ENDS

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