Auckland median house prices drop $10,000

Is the booming Auckland housing market about to run out of puff? It seems unlikely, but looking at figures released by Barfoot & Thompson one has to wonder.

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Is the booming Auckland housing market about to run out of puff? It seems unlikely, but looking at figures released by Barfoot & Thompson one has to wonder.
According to the firm, the SuperCity’s median price for a home — a more accurate indicator than the average price — is down from $820,000 a month ago to $809,500 — a drop of 1.3 per cent. Despite this, the current Auckland median is still 7.9 per cent up on a year ago.
The lower median value is not the result of a lack of buyers, says Thompson.
“In the last two months, the number of sales has not influenced prices,” he says. “In May, turnover was high and in April turnover was low, yet for both months, prices remained relatively static or fell.”
Of all the 1306 properties sold by the firm during May, 464 changed hands for more than $1 million, and 185 sold for less than $500,000 — illustrating the dire need for lower-priced homes (if you can call half a million dollars low-priced or “affordable”).
Too many homes
Over at the BNZ, bank economist Tony Alexander says in his weekly newsletter that in two to three years from now some regions will have seen excess [home] construction compared with population growth, and that some developers and investors will suffer losses.
He says: “Auckland will plateau through the combined effects of prices simply being really, really high, mildly easing migration, higher annual supply growth, and possibly slightly higher interest rates from 2019.”
Instead of raising interest rates, he predicts the Reserve Bank will introduce more controls to reduce the supply of credit by increasing the deposit required by investors in Auckland and elsewhere, and he has a two-way bet on debt to income rules being introduced for new lending.
His advice to investors is to carry on buying — at least until 2018.  Alexander says buying in Nelson, Hamilton, Tauranga, Wellington, and Auckland is fine. But if you look elsewhere, he says, then you need to check population growth assumptions.
Christchurch
Harcourts reports that average property prices in Christchurch hit a record high of $553,000 last month. The firm says the number of properties listed for sale has dropped, which may well be a seasonal issue.
Harcourt’s CEO Chris Kennedy says sales are constantly outstripping new listings. This lack of choice means prices will rise.
Free on Monday
Free with Monday’s Herald is our quarterly Property Report. As usual you’ll see what your home is worth thanks to the latest data from QV.co.nz. Leading figures from the real estate industry share their thoughts on the current state of play and where they think the Auckland market is heading.
There are features covering the trials and tribulations of house-hunting in Auckland, as well as the pitfalls of tapping into your home’s equity.
All that and much more in Monday’s Herald.
Interest rates
There are whispers of interest rates rising to more than 5 per cent come 2019. If it comes to pass, a five-year fixed rate mortgage below the predicted rate may pay dividends.
There are still a few options around. But making a meaningful forecast in these financially turbulent times is near impossible.

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Author: Steve Hart

Steve Hart is a business journalist, editor, designer, podcaster and host of the Cool Nights radio show.