Auckland market drops

The latest Real Estate Institute of New Zealand (REINZ) data shows that the Auckland region’s median price fell by 3%, to $784,250 in October, as compared to September.

Median prices dropped around the region in October. In Rodney, they fell by 9%, on the North Shore they fell by 4%, and in both Waitakere and Manukau they fell by 3%.

The sales volume around the Auckland region also fell in October, as compared to September. It was down by 19%.

However, both median prices and sales were up as compared to this time last year.

REINZ chief executive Colleen Milne said prices and sales were pulling back across the Auckland region after a very strong run through winter and early spring.

“The drop in the number of sales in October is the result of a softening of demand over the past few months and the new IRD and bank account rules introduced at the start of October.”

But she said the fundamental supply and demand drivers of the Auckland market remain in place.

“The result for October is indicative of the market adjustment phase as it adapts to these new requirements.”

The slowdown in Auckland’s market has had an impact on the national median price, which fell by 5.1%, to $460,000, in October as compared to September when it hit a record high of $484,650.

Despite the fall, the national median price was still up by 7% on this time last year.

Nationwide, the number of sales during October were down 4.1% on September, but up by 18.6% on October 2014.

Meanwhile, markets around the rest of the country were strengthening.

New record median prices were recorded in Northland, Manawatu/Wanganui, Wellington and Nelson/Marlborough.

As compared to September, median prices in Hawkes Bay were up by 9%, while they were up by 7% in Northland and 5% in Nelson/Marlborough.

Northland recorded the biggest year-on-year median price increase with a rise of 18%, which leaves it at $360,000.

Milne said they are seeing increasing demand and rising prices around the country as buyers of all types emerge to take advantage of low interest rates.

“It is further evidence of the ‘halo’ effect of Auckland-based buyers searching for value in regional markets. 

“During winter and into early spring, the property markets in a number of regions have been far more active than would normally be expected, thus a slowdown or pause is not surprising following this burst of activity.”

Westpac chief economist Dominick Stephens said the REINZ data was extremely weak and backed up the recent stream of negative anecdotes surrounding the Auckland housing market.

The drop in Auckland sales was not a surprise as the market probably saw a rush of turnover ahead of the tax changes that came into force on October 1.

“More surprising was the large decline in prices in Auckland,” Stephens said.

“A single month of data must always be treated with caution, but we are now watching this space carefully.

“A sharp slowdown in the Auckland housing market has long been a crucial element of our forecast that the OCR will fall to 2.0%. Today's data certainly supports our long-held view.”