Barfoot & Thompson, Auckland's biggest real estate company, says it sold 778 houses in July which was down 11% from June but 21% higher than the sales achieved in July last year. The company also said its new listings in July were the lowest for a decade.
Barfoot & Thompson managing director Peter Thompson said the average price in July was NZ$530,191, about 1% lower than in July 2010 but nearly 2% higher than in June.
“For the past four years we have been selling between 650 and 780 homes in July, and this July’s sales numbers are sitting at the top end of the range," Thompson said.
It sold 644 houses in July last year and 873 in June this year.
He said the low number of new property listings and the total number of properties for sale in July produced the tightest property market for choice in Auckland for four years.
“While choice is limited it is not holding back sales numbers, or contributing to higher prices,” Thompson said.
“Our reading is that with buyers in the market, now represents an excellent moment in time in which to sell a property.”
“Overall, we have a stable market which is waiting for greater certainty in terms of when the economy will start to pick up. In July we listed only 1050 new properties (significantly more new listings than the 778 sales), our lowest number in the last decade, and 8.9% lower than in June."
He said Barfoot & Thompson had 4830 properties on its books at the end of July, meaning you had to look back nearly four years to find a month where choice was so limited.
“While July’s average price edged up 1.8% on that for June it is right in line with May’s average price, and the average price spread across the past three months is less than NZ$1000," said Thompson.
“Normally, the combination of buyers in the market and lack of choice would lead to prices increasing as buyers compete for available properties. Even though there are buyers out there, prices are increasing at only a nominal rate. Buyers are prepared to pay a fair market price, but not over the top."
Barfoot & Thompson sold 8,594 Auckland homes in the year to July, down from 9,036 in the year to July last year.
'Sellers market in Auckland'
ASB Economist Chris Tennent-Brown said he expected continued tightness in supply in the Auckland market to support prices.
He said the ratio of house sales to total listings indicated there are 6 months of inventory on the market, which is below the long-run average of 8.2 months of inventory, and the 10.4 months of inventory at the start of the year.
Seasonally-adjusted turnover fell 3.3% over the month, but was up 22% compared to a year ago, although Tennent-Brown noted seasonally-adjusted monthly turnover was regularly over 1000 properties at the peak of the boom.
"Over recent months, seasonally-adjusted turnover has been around 800 properties, so the market is not booming. However, when the current level of turnover is coupled with the low amount of inventory, the choices for buyers are somewhat limited. The Auckland market seems tipped in the favour of sellers," Tennent-Brown said.
"Given this tightness, it is a little surprising that average house prices from Barfoot and Thompson have been relatively steady over recent months, and are flat when compared to a year ago. A more reliable measure of house prices is the REINZ stratified house price index: in June, this index showed Auckland prices have risen around 4% when compared to a year ago, whereas prices were down on an annual basis in other areas," he said.
"We expect ongoing tightness in the Auckland property market to be supportive of prices in the future, and price gains in Auckland are likely to be stronger than in most other regions over the year ahead. 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 July REINZ nationwide house sales data are released (next week)."
(Updated with comment from ASB, chart below)
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