Prospective home buyers in Auckland are facing slim pickings with listed properties last month having dipped to a four-year low.
Realtor's Barfoot & Thompson, in a housing report released Tuesday, blamed the contraction in the market on economic uncertainty with fretful would-be sellers sitting it out on the sidelines waiting for clarity.
"Choice at present in Auckland is severely restricted,” said Barfoot's manager director Peter Thompson.
"Many current home owners appear to be putting off making decisions about property until they have a better feel for where the economy is heading.''
At the end of June, Barfoot's had 5,067 properties on its books for Auckland. The last time it was that low was in August 2007.
Thompson said new listings for June totaling, 1,253, were consistent with May's numbers (1,169) and June 2010 (1,194) but were "not sufficient to improve the lack of choice which has been tight for the past three months.''
Sales even across price ranges
Sales in June were spread evenly across the region, and all price brackets.
While tight conditions would normally be good news for housing prices and sales volumes, Thompson said that was not the case in today's climate.
"Sales volumes were steady in June with 873 properties sold, and were down 1.8 per cent on May’s sales. However, they were up 31.3% on those for June last year, continuing a four- month trend of this year’s sales being higher than those for the corresponding month last year.
"Prices also eased in June compared, with the average price reaching $521,019, down 1.6% on the average price in May, and down $2,000 on the average price for June last year."
While demand was for properties was robust, Thomson said confidence in the future of the economy was lagging "creating a natural brake on the willingness of owners and buyers to commit to moving on with their housing plans.''
Barfoot & Thompson is forecasting the situation to remain more or less unchanged until late spring.
ASB economist Jane Turner said inventory had fallen to below average levels, which typically sees the balance of supply and demand shift in favour of sellers.
"We expect house prices in Auckland will start to rise in coming months as a result," Turner said.
She said Auckland housing demand had improved ahead of the rest of the country, and remained firm in June.
"Turnover has hovered around current levels over recent months, suggesting the recovery in housing demand is not gaining further momentum," Turner said.
"Nonetheless, the supply of housing on the market is becoming tight, and will likely add to house price inflation pressures in coming months. The recovery in housing demand has been more subdued in the rest of the country, and we expect this trend will be confirmed when the June Real Estate Institute of New Zealand nationwide house sales data is released."
|Period||Number of Sales*||Volume of Sales|
|June 2011||873 Properties||$454,849,622|
|June 2010||665 Properties||$347,834,232|
|12 Months to June 2011||8,460 Properties||$4,537,912,904|
|12 Months to June 2010||9,171 Properties||$4,894,674,036|
*Excludes Northland and Commercial Click here for full list of sales
Rents fall in June
Barfoot and Thompson said the average weekly rent for Auckland property in June fell to NZ$420 from May’s NZ$427. It was based on 707 new rental agreements (704 in May).
“Average weekly rents are extremely volatile in a market where demand far exceeds supply,” said Peter Thompson, Managing Director of Barfoot & Thompson.
“In the past six months average weekly rents have ranged from a high of $434 to a low of $402, and we have never before experienced this level of movement in any six month period." Thompson said.
“The low level of building activity in the past three years combined with the growing population of Auckland is creating pressures on the existing stock of rental properties. “The average weekly rent for this June is the third highest on record, and was $17 higher than last year and $32 higher than two years ago,” he said.
Trade Me rental trends
Here's Trade Me's analysis of rents nationally:
National rental supply has eased over the past quarter, and demand has crept up according to an analysis of listings on Trade Me Property.
Brendon Skipper, head of Trade Me Property, said the number of rental properties listed had levelled off. “Supply is still up but only by 2%, so there’s been a shift down from the lofty heights of the 11% surge we saw last quarter.”
He said the ease in supply has been led by a fall in the number of properties listed for rent in several major metropolitan areas including Auckland (-12%), Christchurch (-6%) and Wellington (-2%).
Auckland was once again a standout as a great place to be a landlord. As well as the massive 12% drop in rental listings on the same quarter a year ago, average rent also jumped 9%. Mr Skipper said this showed that increased demand – enquiries were up 7% -was affecting rental prices and property owners were making the most of it.
In the North Shore there was also a drop in listings (-9%), but the impact on rent had been less significant. “Over the bridge the asking price for rent increased by 4%, but this was pretty much in line with what we saw nationally where rent ticked up 3%,” Mr Skipper said.
He said next quarter was likely to see further pressure piled onto the Auckland rental market with the Rugby World Cup soaking up supply, and people “coming out of hibernation” to look for a new place to live in spring.
It was no surprise to see Christchurch listings had taken a dip (-6%), with demand heading up (+9%). As observed last quarter, the average weekly rent being sought by landlords was not exorbitant, up 5%.
Mr Skipper said the citywide picture was a little misleading. “If we drill down into the suburb-by-suburb picture, it’s clear that there are areas where both supply and demand is very low. On the flipside, in less quake-affected parts of the city, demand is extremely high and supply is struggling to keep pace. We expect this will be the case for the foreseeable future.”
Wellington bucked the trend and saw a drop in average rent of 3%, making it the only area in New Zealand where rent declined. “This is a hangover from the city’s massive 17% increase in listings last quarter,” Mr Skipper said. “On the back of that influx, landlords are now finding it trickier to lock in tenants and are lowering rents to entice them. It’s a good time to be a tenant hunting a place to live in the capital.”
(Update adds comments from ASB economist Jane Turner, detail on rents).