SuperCity sales defy expectations – for now

Thursday 2 July 2020

Auckland’s property market defied economic forecasts in June but that doesn’t mean it will continue to do so, according to the city’s largest real estate agency.

By Miriam Bell

Barfoot & Thompson’s latest data has June sales numbers returning to normal trading levels, with prices remaining stable.

There were 820 sales in June, which was up by 4.3% on 786 in June last year and by 107.1% on 396 in May this year.

At the same time, Auckland’s average price was $953,417, which was up by 0.6% (or $5,000) on May and by 1.4% on June last year.

The median price came in at $910,000 which was actually down by 0.4% on May but up by 7.7% on June last year.

Barfoot & Thompson managing director Peter Thompson says it was a remarkably solid month’s trading with no signs of market fragility.

“What contributed to the robustness of the market in June was solid new listings at 1,582 (up 56.3% from June 2019); an influx of first-time buyers; and some catch up business from the slow sales in May.”

But it is far too early to see this result as an indicator that the property market will defy forecasts and ride out the Covid-19 pandemic unaffected, he says.

“It does suggest that over a three to five-year time horizon buyers have confidence in property at today’s prevailing prices and that they are not holding back in the hope of a major decline in values.”

Properties in the above $1 million price segment were in demand, making up 44.6%of all sales, Thompson adds. “You have to go back more than two years (May 2018) to find a month when more $1 million plus sales were made.”

The agency ended the month with 4,001 properties on their books. Thompson says this gives buyers their greatest choice of property for 12 months.

Meanwhile, CoreLogic’s senior property economist Kelvin Davidson is warning about over-optimism when it comes to the housing market.

They recently ran a survey of users of their Property Guru platform and he says the results are a reality check on some of the strong positive sentiment that’s emerged lately about the market’s prospects.

“To be clear, we don’t think that the outlook is all doom and gloom. But at the same time, we’ve had the sense recently that the effects on property from the recession and rising unemployment might have been temporarily overlooked.”

Since the move out of lockdown in late April, market activity on a range of measures (both sales and rent) has rebounded.

Davidson says they’ve been wary of being unduly pessimistic about the economic and property market outlook.

“But there’s a sense that some have now become too optimistic – after all, we’re in a recession and unemployment has further to rise yet. These factors will restrain the property market for the rest of 2020 at least.”

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