FEATURES | HOUSING COMMENTARY
Roller-coaster ride Sally Lindsay covers the ups and downs of the housing market, as sales plummet but prices defy expectations.
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he number of houses being sold across Auckland has fallen dramatically to levels not seen since 2010, when the country was technically in a recession after the global financial crisis. However, the median price defied expectations in June, increasing by 2% on prices for May, Barfoot & Thompson’s latest statistics show. Just 684 properties were sold last month, down 12.5% on May sales and 45% down on the same month last year. Sales of properties for the month were the lowest they have been in a June month since 2010. Barfoot & Thompson’s managing director, Peter Thompson, says the impact is being felt most in the number of sales being made – as in 2010. “Rather than accept the prices on offer, some homeowners are removing their homes from the market. This effect can be seen in the number of properties for sale at month end.” Although Barfoot & Thompson, Auckland’s biggest real estate agency, listed 1,255 new properties during June, more than double the number it sold, total listings at month end had fallen by 0.5% on the previous month to 4,676.
Median price-rise unexpected Thompson says nobody saw the modest increase in prices coming. The $1,147,500 median price stopped a three-month decline in the median price and was 3.5% higher than the median price in June last year. The average price, at $1,158,464, did drop on that for May, by 2.6%, but it also remained higher than the average price for June last year by 1.3%. Rather than seeing the median price increase as a low-water mark, it is more likely to be a statistical blip that can occur when comparing statistics on a month-by-month basis, says Thompson. “It was not caused by any significant shift in the numbers of homes being sold in various price brackets, with the sales numbers in the $2 million and $3 million price segments remaining constant with the lower priced categories. “It does signal house prices are not in full retreat, and are moving back 014
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gradually, as vendors recognise that if they want to sell, they need to have some flexibility as to price expectations.”
Rental supply spikes while demand dwindles A big turnaround has hit the previously buoyant residential-rental market. Across the country the number of properties listed for rent surged 12% to an all-time high year-on-year in May, according to Trade Me’s latest rental price index, but demand fell 8%. There were significant regional differences in the figures. Wellington’s listings lifted 45%, followed by Marlborough 24%, Auckland 16% and Manawatu/Whanganui 5%. However, listings in Northland, Waikato, Hawke's Bay, Taranaki, NelsonTasman, Otago and Southland dropped compared to a year ago, while there was no change in Canterbury. All regions apart from Canterbury and Southland had a drop in demand from prospective tenants, with the biggest declines in Nelson/Tasman, down 28%, Northland 19%, and Taranaki 15%. Southland, up 8% and Canterbury, up 21%, were the only regions to see demand for rentals climb when compared with May last year. The rental market is mirroring the property-for-sale market in May, with nationwide supply up 48% year-on-year, while buyer demand dropped by 9%.
Rents drop for the first time this year In May, the national-median-weekly rent fell by 1%, when compared with April, to $575. This marks the first month-on-month drop this year, and is $5 less than the all-
time-high national-median-weekly rent recorded in April. However, when compared to the same month last year, May’s median weekly rent marks a 7% rise. Waikato was the only spot to see a new all-time high median weekly rent in May, reaching $525. The biggest yearon-year rises were in Taranaki, up 16%, Northland, and Southland (both up 11%). Trade Me sales director Gavin Lloyd says if the pattern continues, rents may tumble as landlords scramble to fill their rentals in a less competitive market.
Building consents still high Despite the number of property-for-sale listings swelling and demand dwindling, the number of consents issued for new dwellings eased just 0.5% in May. Just over 51,000 new houses were consented in the 12 months to the end of May, Statistics New Zealand figures show. This was up 17.3% compared to the 12 months to the end of May last year. Most of the growth in building consents came from townhouses and units, with numbers up by 47.7% in the year to May while growth in stand-alone houses was at 2.1% for the year. The total value of all building work consented in the year to May was $31.4 billion, up 19.5% on the previous 12 months. Of that, new houses accounted for $20 billion, up 23.6%, structural alteration work to residential buildings another $2.5 billion, up 15.1%, and commercial and industrial building work another $8.9 billion, up 12.3%. Westpac senior economist Satish Ranchhod says while the number of new houses being consented has charged
‘Materials and labour are in short supply, and the costs for builders - including financing - have skyrocketed. That’s squeezing operating margins for many firms, especially for many smaller operators’ Satish Ranchhod
