Property prices chill in the Super City

Auckland’s average asking price fell a small, but significant $350 on last year to $918,650 in a sign the Super City's property market is settling back to a more normal rhythm after years of frantic growth, according to the latest Trade Me Property Price Index.

Head of Trade Me Property Nigel Jeffries said Auckland’s market has ground to a halt after a number of years of “stella” growth.

“Auckland’s growth has been dramatic and well-documented but that growth has finally died down and we’re seeing a more normal market with dips and fluctuations,” he said. “The key ingredient in any market growing like Auckland has been is a mismatch between supply and demand. Demand is dipping which means the Auckland market is finally slowing.”

Temperatures and prices dropped in May, alongside views from buyers. The average number of views on Auckland properties for sale is down almost 6 per cent on last year and fell 20 per cent compared to May 2016.

“There are exceptions, some pockets of the market are still extremely strong,” Mr Jeffries said. “Demand for the sought-after suburb of Kingsland increased significantly in May with the average number of views on properties for sale increasing 111 per cent on last year.”

Glendene and Orewa followed close behind Kingsland, with respective jumps of 67 per cent and 54 per cent in the average number of views since May 2017.

Mr Jeffries said it was a great time for first home buyers if they had a deposit behind them. “There are plenty of options in the Super City with 6 per cent more properties on the market than last May and 47 per cent more than two years ago. Sellers are finding it a little harder than they were a year ago so there are more opportunities out there for buyers.

“However, despite the slowing property prices, values are still very high. Couple that with bank lending restrictions and low increases in pay and we understand it’s still pretty tough for first home buyers aiming to get on the property ladder.”

The country charges on

Mr Jeffries said the average asking price across New Zealand reached a record high for the first time since April last year, rising 0.8 per cent to $645,900 in May.  

“Six regions across the country reached record asking prices in May with Hawke’s Bay being the standout performer, climbing 17.9 per cent on last year to reach $534,850,” he said.

Marlborough climbed 13.3 per cent on May 2017 to reach $492,450, Taranaki was up 13.2 per cent to $435,300 and Wellington jumped up 10 per cent to $589,600. Northland and Bay of Plenty also hit new highs climbing 8.6 per cent and 5.3 per cent to $558,150 and $620,550 respectively.

“Anecdotally, we’re hearing of more and more people looking to the regions for a better work-life balance so it’s not surprising that we’re seeing areas like Marlborough, Hawke’s Bay and Northland becoming very popular with Kiwis,” he added.

Wellington prices jump up

Mr Jeffries said Wellington’s average asking price continued its upward trend in May, climbing 3.2 per cent on April to reach a record asking price of $589,600.

“With 4 per cent less properties on the market than last May, supply is struggling to meet demand and it won’t be long before property prices in the capital crack the $600,000 mark,” he said.

Medium and large houses reach new high

Mr Jeffries said medium houses (3-4 bedrooms) saw record asking prices in May after rising 1.4 per cent on last year to $648,750. In Wellington, the average asking price for a medium-size house grew a solid 9.2 per cent to a new record of $608,000.

“Large houses (5+ bedrooms) across New Zealand were up just under 1 per cent in May, but those outside Auckland saw a jump of 11 per cent to $811,650. Auckland dragged the national average down with large houses down 0.7 per cent on the year prior to $1,419,700 and back to what we saw in October 2016,” Mr Jeffries said.

Table 1: Average asking price by property size & region, May 2018 vs May 2017

Townhouses lead the charge in Auckland

“Townhouses in Auckland appear to be the hot favourite after they cracked the $900,000 mark for the first time in May. They’re still a cheaper option than buying a house in the Super City and with less maintenance costs they’re an attractive option for buyers wanting to get into the market,” Mr Jeffries said.

Table 2: Average asking price by property type & region, May 2018 vs May 2017

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.