Winter fails to take the heat out of the property market

Winter has failed to take the heat out of the New Zealand property market and as temperatures dropped in June property prices rose, according to the latest Trade Me Property Price Index. 

Head of Trade Me Property Nigel Jeffries said thirteen of the country’s fifteen regions experienced year-on-year growth in June. “Conventional wisdom suggests that selling in winter is unwise - sellers are worried there are less buyers and that their property might not look as good as it can under that summer sun. 

“From what we’re seeing they don’t need to worry - there is strong demand right around the country and sellers who are confident they’re going to get a good price.

The only regions to experience the winter blues were Taranaki (down 3.4 per cent) and Auckland (down 2.4 per cent).

Mr Jeffries said the national average asking price rose a “modest” 1 per cent on last year to $648,650 in June. “However, if we exclude Auckland, the average asking price in New Zealand rose 6.8 per cent on last June to $540,600. Property prices in Gisborne experienced a 16 per cent jump when compared to last year while Southland rose 15.8 per cent. Manawatu/Whanganui was also up a significant 15 per cent year-on-year.” 

Mr Jeffries said a combination of low interest rates and increased competition was driving price increases across the regions. “With interest rates at an all-time low and word they could be trimmed again, some buyers appear more motivated to get a foot on the property ladder. 

“Buyers are also facing more competition. In June we saw a 10 per cent bump in the average number of views nationwide when compared to 2018. The number of properties on the market is more or less the same so sellers should hope for plenty of interest in their property with supply not meeting demand.”

Auckland property prices fall to lowest since 2016

While most regions saw year-on-year growth, Auckland’s average asking price fell to its lowest since September 2016 - dropping 2.4 per cent year-on-year to $887,950 in June. 

Mr Jeffries said Auckland’s property market continues to decline. “In May we saw the largest year-on-year percentage decrease since 2014 at 1.9 per cent. In June it fell even further dropping 2.4 per cent, causing prices to tumble another $13,700 on May.

“Auckland has seen phenomenal growth over the last few years and it’s unsurprising the market has finally taken a break. We’re watching with interest to see how this trend will continue, our prediction is we’ll see further dips in the coming months before it rallies in Spring.”

Mr Jeffries said buyers in the region are opting for smaller, more affordable properties. “The only property type in the region to see year-on-year growth were apartments which rose 3.4 per cent to $665,200,” he added.  

Wellington property prices run hot

Mr Jeffries said Wellington continues to be a stand out as property prices in the capital keep rising. 

“The average asking price in the Wellington region climbed 10.8 per cent on the year prior, or $62,450, to $642,900 with all but one district seeing strong year-on-year growth.”

Mr Jeffries said Upper Hutt and Porirua saw “incredible” growth in June jumping up 20 per cent and 17 per cent respectively on 2018 to reach new records at $613,850 and $686,850. 

District

Average Asking Price (June 2019)

Year-on-year change

Wellington

$760,350

+9.5%

Lower Hutt

$587,100

+10.5%

Upper Hutt

$613,850

+20.2%

Porirua

$686,850

+17.2%

Kapiti Coast

$597,900

+5.5%

Masterton

$398,800

+5.0%

Carterton

$460,350

-0.5%

South Wairarapa

$573,750

+11.6%

“Wellington simply doesn’t have enough available properties, the demand for housing is pushing prices up and we don’t expect that to change any time soon.”

Waikato hits new high, again

Mr Jeffries said the average asking price in Waikato reached a new high for the fifth consecutive month rising 8.8 per cent in June to $591,650.

“If we look back over the last five years, property prices in Waikato have increased rapidly as more Kiwis look to move out of the main centres. Prices in Waikato have risen 65 per cent since June 2014 when the average asking price was just $358,450.”

Large houses (5+ bedrooms) fall 

Mr Jeffries said nationwide, large houses (5+ bedrooms) were the only house size to take a hit in June, falling 1.9 per cent to $1,108,250. “Medium houses (3-4 bedrooms) and small houses (1-2) bedrooms hit record high across this country hitting $654,150 and $447,600 respectively.

“Auckland’s market has softened almost right across the board, all house sizes in the Super City saw a dip in average asking price in June. Large houses in Christchurch were a stand out in June, rising a significant 14.3 per cent year-on-year to $832,950,” he added. 

Units dip in the three main metros

“Across the three main metros, the average asking price for units fell in June. The biggest dip was in Wellington where the average asking price for units fell 13 per cent on last year. 

“Townhouses in Wellington, on the other hand, were up almost 19 per cent with several new townhouse developments in the region likely driving this increase,” 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.