Limited supply pushes prices up

Barfoot & Thompson’s latest data shows that both the average sales price and the median sales price climbed in March.

The average sales price rose by 5.4%, from $822,024 in February to $866,782 in March. 

This was the third highest average sales price on record and put it in within $10,000 of November’s record high of $876,075.

The median sales price increased by 8.1%, from $738,000 in February to $798,000 in March.

This was the second highest median sales price on record and put it in within $2,000 of December’s record high of $800,000.

Sales volumes also jumped significantly.

The number of houses sold in March was up by 92.1%, from 698 sales in February to 1341 sales in March.

Barfoot & Thompson managing director Peter Thompson said March tends to be a busy sales month, but is a good indicator of where prices are tracking for the remainder of the year.

“When prices are this strong in March the trend is for prices to hold steady through the year.”

However, lack of supply continues to be the main price driver – and, at the end of March, listings were down by 6.8% on February, he said.

“There has been a definite increase in the number of properties being sold under the hammer at auction, indicating keen buyer competition for available properties.”

Thompson said that, although a record number of consents are being issued and building activity is high, Auckland is simply not building homes fast enough to keep up with the growing population.

The latest Statistics New Zealand data showed that in February alone the population of Auckland increased by about 3000 people, he said.

“Based on the Auckland average occupancy for houses of three people to a property, theoretically 1000 additional properties would have had to become available in the month to house such growth.”

Auckland’s supply shortage is an ongoing concern for both local and central government.

But, despite initiatives like the freeing up of Crown land for housing development and Special Housing Areas, the end of the problem is not currently in sight.

Meanwhile, Westpac senior economist Michael Gordon took a slightly different view of the Barfoot & Thompson data.

The data suggested there was a modest pickup of activity in March, with sales up by about 7% once seasonally adjusted, he said.

“But that was still a third below their pre-regulation peak in September last year.”

In seasonally adjusted terms, both the average and median sale prices were pretty flat for the fourth consecutive month, Gordon said.

“While the unadjusted sale prices saw a sharp rise in March, that is entirely normal for this time of year.

“It probably reflects the changing composition of sales rather than the strength of housing demand.”