The brakes have been applied to the Auckland property market after the average asking price fell 1.9 per cent to $901,650, the largest year-on-year percentage decrease since 2014, according to the latest Trade Me Property Price Index.
Head of Trade Me Property Nigel Jeffries said while this decline may seem relatively small, it shows that after years of incredible growth the Auckland property market has hit a slump. “Property prices in the region have been flat for a number of months but now it seems the Auckland property bubble is losing air and prices are on the decline.
“With the government’s restrictions on foreign buyers and new regulations for landlords, the Auckland property market is seeing less overseas buyers and investors which is cooling property prices.”
Mr Jeffries said some of Auckland’s popular inner-city suburbs experienced a dip in property prices in May.
“Property prices in Parnell fell 14.8 per cent to $1,436,250 in May along with Ponsonby which dipped 4.1 per cent to $1,607,750. The average asking price in Remuera also softened in May, dropping 7.8 per cent to $1,957,100 while Mission Bay saw an 8.7 per cent drop to $1,645,300.
“When we look at the types of properties that are selling in the Super City, apartments are the new favourite property type for Aucklanders with a 19 per cent year-on-year increase in the number of apartments sold in May. This surge of interest in apartment living has pushed the asking price up 11 per cent year-on-year to $680,350.”
Mr Jeffries said on the whole, there is still interest in the Auckland market with the average number of listing views up 2.3 per cent on May last year. “The demand is there but buyers are unwilling to pay the huge prices that could be demanded 12 months ago - sellers will need to reset their expectations a little at the moment or hold on until prices track north again.”
Wellington’s record run continues
Mr Jeffries said that while Auckland was slipping Wellington’s average asking prices were heading in the opposite direction. “Property prices in the capital have continued their record-breaking streak after the average asking price rose 11.6 per cent year-on-year to $658,250 - an annual increase of $68,000.”
Mr Jeffries added that property prices in the Wellington region took off in mid-2016 and have showed no sign of slowing since.
“Despite an increase in stock coming onto the market in May, prices continued to climb in the capital. In May we saw 12 per cent more properties on the market than in 2018 while the average number of views climbed 6 per cent.
“The average asking price in Upper Hutt took the prize for growth in May, rising 13.9 per cent to a new record at $590,250. Lower Hutt came in close behind after climbing 13.2 per cent to $606,450. Porirua was up 11.2 per cent to $652,900 while Wellington city saw an 8.8 per cent jump to $770,650.”
“We’ll be watching the Wellington market closely over the next few months. Typically we expect prices to cool during winter but every sign we’re seeing is pointing towards this record breaking run continuing.”
National asking price cools
Mr Jeffries said the national average asking price fell to 1.5 per cent on April to $663,800 in May. Demand has also begun to cool down, falling 1 per cent on last year.
Mr Jeffries said this was expected at this time of year as the property market experiences the seasonal winter slump. “It’s not unusual for average asking prices to flatten off in winter, it’s usually a quieter time of year.”
Regions a mixed bag
Mr Jeffries said the regions were a mixed bag in May with three regions hitting new records and large dips in others.
“The Waikato, Wellington and Otago regions hit record high average asking prices, while the average asking price in Auckland, Taranaki, and Marlborough average asking prices fell against May last year.
“Otago’s property market went gangbusters in May, shooting up 11.3 per cent to reach a record asking price at $591,750. Demand in the region has jumped 22 per cent on last year.”
Mr Jeffries added that Waikato was another standout performer, hitting a new record for the fourth consecutive month after the average asking price rose 7.8 per cent to $591,550.
Large houses take a hit
Mr Jeffries said large houses (5+ bedrooms) took a hit in May, with the national average asking price falling 3.3 per cent to $1,105,400. “This was driven largely by big dips in Wellington and Auckland where large houses are becoming less and less affordable for most Kiwis.
“Every house size in Auckland saw a dip in asking prices when compared to last May as the region’s property market cools.”
Apartments gain momentum
“Apartments have been increasing in popularity nationwide and in May the average asking price skyrocketed, jumping 9.8 per cent to $661,500.
“This growth has been driven by a rising number of Aucklanders looking at apartments with the average number of views up 8.5 per cent on the year prior,” he added.
About the Trade Me Property Price Index:
The Trade Me Property Price Index measures trends in the expectations of selling prices for residential property listings added to Trade Me Property by real estate agents and private sellers over the past three months.
It provides buyers, sellers and realtors with insights into ‘for sale’ price trends by property type and property size.
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 to calculate the average asking price. This excludes the upper and lower 10% of listings by price, and averages the expected sale prices of the remaining properties.
It provides an insight into ‘for sale’ price trends by type and size of property. Other reports aggregate property price data across these various properties.