Market Update: Relief on the horizon

Next Article

Property Feature - 34D Arney Crescent, Remuera

MARKET UPDATE:

HOUSE PRICES EXPECTED TO CONTINUE

TO FALL BUT ‘Relief ON THE HORIZON’

New data shows the average asking price of standalone homes and townhouses in Auckland managed to hold ground in August, but property seekers still have the edge, and house prices are expected to continue to stabilise.

Auckland followed Wellington into a buyers’ market in April, after hitting a 15-year record high average asking price of $1,277,353 in January 2022. Since then, Auckland’s average asking price has cooled by 7.1%, dropping to $1,186,465 in August, allowing for seasonal adjustment, the latest data from realestate.co.nz shows.

Realestate.co.nz spokesperson Vanessa Williams says the cooling housing market offered buyers plenty of choice in August.

“In August last year, our data reported the lowest housing stock in our 15-year history. Fast-forward to today, and we’ve seen stock double year-on-year, which is starting to be reflected in asking prices,” Williams says.

“We’ve seen this coming for a few months, and there has been plenty of speculation about downward trends in the market. But instead, we’ve seen a slow stabilisation of the unprecedented market we witnessed during the pandemic.” When compared to August 2021, Auckland’s average asking price was up 0.4% to $1,186,465.

“As we dig deeper into the data, we learn that the property types seeing the greatest impact of the buyers’ market and rising housing stock were apartments and lifestyle blocks. Year on year, average asking prices for apartments dipped by -9.9% to $695,762, and lifestyle blocks dipped by -5.1% to $2,029,551,” Williams says.

However, the asking prices for standalone homes and townhouses appeared to hold their ground last month, with the average price now at $1,159,548, an increase of 0.6% year-on-year.

ASB’s latest Quarterly Economic Forecast warned last week that house prices are expected to continue to fall until mid-2023.

ASB Chief Economist Nick Tuffley says New Zealanders are...

“set to face a tough year as the continued pressures of inflation, housing, and a tight labour market combine”

26

THE BLACK BOOK.

“Inflation likely hit its peak midway through this year, but it’s going to take a while to get down to a sensible level so there’s going to be a long tail,” Tuffley says.

“The Reserve Bank has been reacting to this by rapidly increasing the Official Cash Rate, which we expect to reach 4% by the end of this year and remain high throughout 2023,” he says. He says households may feel added mortgage servicing pressure over the next year. “Eventually though, interest rates are likely to come down but we don’t envisage that until sometime in 2024.” Tuffley says strong wage growth will outpace inflation next year and lift people’s purchasing power, but this could prove to be a challenge for employers when it comes to finding and retaining people. “The message is it’s going to be pretty challenging this year and a chunk of next year, but then we should start to see some relief on the horizon as the housing market stabilises again and inflation and interest rates start to ease a bit,” he said. Ray White CEO Carey Smith says since February 2022 there has been a quick and considerable decline in the number of sales that have taken place.

“The supply of property has lifted more than 72 percent in the last 12 months; emphasised in the previous quarter with an increase of 91 percent more properties available for purchasers to view.

“When you add that there are fewer sales in the market, this has meant a record number of properties on the market, being 79.65 percent higher than the same time last year. Supply has increased and demand has dropped, resulting in fewer sales and sellers realigning their sale price expectations,” Smith says.

He says the market has certainly been different in the last two years.

“While prices still have a much higher value than two years ago, the normalisation of stock levels is closer. This is likely to continue across New Zealand; there will be approximately 30,000 properties available for sale with a long-term average inventory of approximately 27 weeks.

“This would indicate a much more balanced market favouring those seeking value by comparison,” Smith says.