First signs of a slowing Auckland property market?

First signs of a slowing Auckland property market?

Auckland’s surging property for sale market has shown its first signs of easing in 18 months, with asking prices down 2.2 per cent in the three months to July.

According to Trade Me Property’s July Price Index, the property for sale market in New Zealand’s biggest city is hinting at a slowdown after a run of record-breaking increases. Head of Trade Me Property Nigel Jeffries said the dip could foreshadow a market correction, but “might simply be a mid-winter speed bump” before the long-term trend continues.

“While a single month doesn’t confirm a trend, the asking price is a lead indicator of the market based on thousands of listings added to Trade Me Property by real estate agents and private sellers each month. This blip could mean a change in direction for the market or may just be a temporary stall,” said Mr Jeffries.

“Historically we see a dampening in expected sale prices in winter, as sellers wait for warmer months to list their properties on the market. We’ll be watching the coming months with interest,” he said.

In contrast to the City of Sails, the rest of the country collectively showed an increase in average asking price with a 2.5 per cent rise when compared to the three months to June.

Auckland market price trend fragmenting

While Super City asking prices eased in the three months to July to $756,700, the 12-month trend continued to build, up 18 per cent on July last year.

All types and sizes of properties in Auckland saw price expectation fall except for medium houses (3-4 bedroom), the largest segment and over 40% of listings. Asking prices rose 1.1 per cent in the month and 19.1 per cent on the previous year.

The largest fall was seen in small houses (1-2 bedroom), down 4.5 per cent in the period, followed by large houses (5+ bedroom), down 4.4 per cent. Large houses are a small proportion of properties but saw the mean asking price fall $52,400 to $1,136,600.

“Looking longer term, a one-month adjustment in the expected selling price in Auckland hardly impacts the five-year trend. We’ve seen a 59 per cent increase from $476,350 back in 2010 to $756,700 this year, showing there’s been steady growth of over $50,000 per annum,” Mr Jeffries said.

Meanwhile outside of the Super City….

Mr Jeffries said the rest of the country was “on the other end of the see-saw”, up 2.5 per cent outside of Auckland in expected selling price monthly, and up on the previous year by 5.5 per cent to $414,800.

“The easing in Auckland was balanced by a surprising and noticeable lift in the market around the rest of the nation, reversing the negative trend from the previous two months,” he said.

“Looking back over the past five years, average asking prices around the country excluding Auckland have gone up by 22 per cent, or $73,700. Compared to Auckland’s pedal-to-the-metal rise of almost 60%, it’s still clearly a two-speed market.”

Regions turn about-face

Only four of 15 regions reported a drop in asking price expectation compared to the previous year, all declining for the first time in over six months. The five regions that showed declines last month - Waikato, Manawatu/Wanganui, West Coast, Otago and Southland - all bounced back to positive growth.

The regions witnessing big rises in July versus the same time last year were Auckland (up 18.0 per cent), Bay of Plenty (up 12.0 per cent), Southland (up 11.6 per cent) and Canterbury (up 10.7 per cent).

The Manawatu / Wanganui region bounced back from a 6.2 per cent decline last month to record a significant 9.8 per cent rise in July, while Otago reversed a five-month decline in average asking price with a 2 per cent rise.

The twin regions of Nelson and Marlborough both slipped off recent rises, with price expectation falling 4 per cent and 0.4 per cent respectively.

By house size

Medium houses represented the largest proportion of properties in Auckland and continued to climb in average asking price, setting a record high of $792,950, up 19.1 per cent over the past year. Christchurch followed suit, up 9.8 per cent and adding $43,950 to a typical medium-sized property in the Garden City over the previous twelve months.

Table 1: Average asking price by property size & region, July 2015 v July 2014

Apartment market shows little in the way of easing

Buyers seeking inner-city properties saw average asking prices for Auckland apartments dip 3.2 per cent in the month, but saw little long-term impact on the previous 12 months, up 33.3% to $497,600. Wellington saw the opposite, falling 22.4 per cent in the month and dragging the annual change down 8.6 per cent.

Table 2: Average asking price by property type & region, July 2015 vs July 2014

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