New Zealand property market off to a slow start

New Zealand property market off to a slow start

The heated property for sale market of 2015 cooled as quickly as a southerly in January, with most regions seeing average asking prices slip back according to the latest Trade Me Property Price Index.

The Index measures trends in the expectations of selling prices for residential property listings over the previous three months. Head of Trade Me Property Nigel Jeffries said the average asking price of a property in New Zealand fell to $541,900 between December and January.

“We’ve now seen three consecutive falls in average asking prices across November, December and January. In January average asking prices fell by 2 per cent compared with December, but were up 9 per cent on a year ago,” he said.

The powerhouse Auckland market slipped back again in January, down 0.5 per cent, as the explosive growth seen through most of 2015 continued to ease. In the three months to January, the expected selling price of Auckland properties was down $3,900 to $801,400. Between January 2015 and January 2016, average asking prices in Auckland rose by 15.4 per cent or $107,050.

Mr Jeffries said that over the past 18 months the average asking price of a property in Auckland had surged up in “an almost unbroken run” from $641,500 to $801,400.

“We’ve seen a staggering $160,000 added to the average asking price of a house in Auckland over the past year and half, which is an average rise of over $8,500 per month. And if we look back to January 2011, we’ve seen the average asking price up 60 per cent or a shade below $300,000.”

Bay of Plenty looks set to lead the property market

The Bay of Plenty continued to power ahead with average asking prices rising 12.2 per cent over the past 12 months, edging closer to Auckland’s 15.4 per cent increase.

“While Auckland has started to take its foot off the gas, the Bay of Plenty remains solidly in overdrive. Outside these two, no other region is showing a double-digit rise. In the past 12 months the asking price in the Bay of Plenty has risen by $55,300 and pushed the five-year increase beyond 30 per cent for the first time,” Mr Jeffries said.

Stronger property market across the regions

While Auckland’s average asking prices ease, the majority of regions across the country are seeing modest growth. Excluding Auckland, the national average asking price at $427,200 was flat between December 2015 and January 2016, but up 5 per cent or $20,000, compared to January 2015.

Thirteen of the fifteen regions across the country saw increases with most recording a lift of between 4 to 10 per cent.

“The powerhouse region of Bay of Plenty and the cooling Auckland lead the pack, while at the other end of the spectrum we’ve seen some weakness in the West Coast, Canterbury and Wellington. Taranaki and Otago dipped into negative territory, and it’s fair to say they are pretty regular participants in this category,” Mr Jeffries said.

By house size

Mr Jeffries said the data for January showed positive growth across all house sizes, except for small houses in Christchurch, down 2.5 per cent.

“We saw larger homes achieve the strongest year-on-year growth, up 9 per cent nationally. This is heavily influenced by the Auckland market where the average asking price is up an eye-popping $248,150 in the past 12 months to $1.26m – that’s equivalent to over $20,000 a month or $680 a day.”

Mr Jeffries said this growth was echoed in Wellington and Christchurch, where average asking prices for large houses were up 11 per cent and 18 per cent respectively.

Small houses (1-2 bedrooms) showed a healthy 10.2 per cent annual increase nationally, with Auckland up 12 per cent, and the rest of the country ticked up 6.5 per cent.

“These smaller properties are reporting almost the same average asking price in both Wellington and Christchurch,” Mr Jeffries said. “But Wellington’s average asking price is on the rise while Christchurch is heading in the other direction. Note too that in Auckland you could expect to pay roughly double.”

Table 1: Average asking price by property size & region, January 2016 v January 2015

Apartments showing signs of weakness

Apartments saw huge lifts in average asking price across 2015, especially in Auckland, but Mr Jeffries said this growth had begun to wane.

“Six months ago the average asking price of an apartment in Auckland rose by over $60,000 in a single month to $566,000, a year-on-year increase of 49 per cent and peaked at just over $600,000 in November. However, we saw a significant release of pressure when they fell to $547,000 in January.”

He said new developments had changed the composition of the apartment market in Auckland over the past few years, and there looked to be some heat dissipating from the apartment segment. Wellington and Christchurch also showed showing significant year-on-year declines in average asking prices for apartments.

Table 2: Average asking price by property type & region, January 2016 vs January 2015

ENDS

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