Hesitancy colours Auckland market

Tuesday 5 December 2017

Uncertainty over the details of the government’s housing policies continues to weigh on the Auckland market - yet new data shows sales are up.

By Miriam Bell

Barfoot & Thompson’s November data reveals the agency’s sales were up by 19.4% to 757, from October’s low of 634.

While the number of sales was down by 20.1% on last November which saw 947 sales, it was the highest number since August and also 9.7% higher than the average for the previous three months.

Barfoot & Thomson director Kiri Barfoot says the increase indicates the Auckland market is holding firm and buyers are returning.

“Both the average price at $913,244, and the median price at $830,000, were right in line with what we have been achieving over the previous three months.

“While the numbers are down on their equivalents in November last year that was a time when the market was close to reaching its peak.

“This November’s trading is a sure sign that at current values buyers are returning to the market.”

There was 1,955 new listings in November and that brought the number of properties on the market at months end to 4838, Barfoot says.

“This is the highest number we have had in more than five years. There is now a quarter more properties on the market than at the same time last year.”

The agency also sold more rural and lifestyle properties in November than it has since March, she adds.

“Interest from local developers and land bankers is returning, but there is still a degree of hesitancy as they await a clearer understanding of future government policy.”

Market uncertainty remains the name of the housing game for many commentators.

ASB economist Kim Mundy says the Barfoot & Thompson data shows sellers are starting to return to the market but sales activity remains subdued.

This combination of factors has contributed to a sharp lift in total inventory levels, leaving them nearly 25% than they were in November 2016.

Mundy says this trend of higher inventory levels and still-subdued sales activity is likely to continue to weigh on price growth in the near-term.

The numerous uncertainties on the horizon make it hard to ascertain the underlying direction of the market, but policy uncertainty will continue to weigh on investor demand in particular and, as a result, prices over the coming months.

“Looking further out, the combination of easing LVRs and an ongoing supply shortage should underpin house prices,” she says.

“However, policy changes will continue to weigh on facets of demand and we expect limited upside to house prices given stretched affordability relative to domestic fundamentals.”

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