Demand for big city property falls

The real estate website’s data shows that demand for property in Auckland declined by 10.8% in February.

Realestate.co.nz spokesperson Vanessa Taylor said demand in the city has now fallen for 12 consecutive months.

At the same time, new listings were up by 2.2% year-on-year, while inventory now sits at 18 weeks as compared to 16 weeks in January.

However, prices in the city continue to rise.

The average asking price for an Auckland house was up by 0.8% to $950,446 in February, as compared to $943,002 in January.

The average asking price for an Auckland apartment reached a record $711,892 in February.

Taylor said they have seen the cost of Auckland houses moving upwards and now the average asking price for an apartment in the city has hit an all-time high.

“For many buyers, it could well be a matter of embracing apartment living, accepting the reality of today’s asking prices, or looking to move or invest in another region.”

It seems that it could be the regions which are poised to benefit from this as New Zealand’s second biggest city has also seen a fall in demand recently.

Realestate.co.nz’s data shows that demand for Wellington property fell by 18.8% in February, while inventory in the city increased to nine weeks from six weeks in January.

But the Capital’s average asking price went up by 0.5% to $559,569 in February, as compared to $556,807 in January.

In stark contrast, the data shows that the top regions people have been looking at property in are the Hawkes Bay, followed by Otago, Gisborne and Manawatu-Wanganui.

The increase in demand in those regions is 7.5%, 8.6%, 17.0% and 23.6% respectively.

Taylor said a drop in big city demand indicates that it’s not just retirees who could be considering cashing up and moving away from cities like Auckland.

“With technology and internet advancements the way they are, and with more people working from home, it is now more feasible for young people who still need to work to do so remotely from the regions.

“Younger house hunters who can’t afford big city prices now have another consideration set.”

Despite this, the total number of houses for sale nationwide lifted for the second month in a row in February.

ASB economist Kim Mundy said rising national inventory levels were being driven by the increase in Auckland inventory which is now at its highest level since October 2012.

The new investor LVRs and recent lifts in long-term mortgage rates could also be weighing on demand, she said.

“We expect housing activity to continue to cool over 2017 and, as a result, inventory levels could continue to climb slightly higher.

“However, from a historical perspective inventory levels remain very low and, combined with strong population growth, this will continue to support house prices.”