By Bernard Hickey
Auckland's largest real estate agency chain, Barfoot and Thompson, has reported its strongest property sales in a May since 2003, right at the start of the 2002 to 2007 property boom.
Sales of 1,165 in May were up 55% from April and 31% higher than in May 2011.
The average sale price in May of NZ$582,285 was a record high and up from NZ$568,018 in April. The previous record high of NZ$581,190 was in March 2011.
"A significant number of new listings, keenly priced mortgage lending rates, fine weather and a large pool of potential buyers all played their part in the level of activity achieved, deferring the slow down that normally occurs with the approach of winter," said Barfoot and Thompson Managing Director Peter Thompson.
Barfoot's figures are closely watched because they are the first released in any month and reflect activity through the biggest agency chain in the biggest market. Market trends have tended to emanate out of Auckland in previous years.
There were 1,421 properties listed with Barfoot and Thompson in May, up 12.% from April and up 22% from May 2011.
"High new listings were not sufficient to meet buyer demand, and at month’s end the number of homes on the company’s books was 4,356, the lowest at a month’s end for five years," Thompson said.
"The low number of new homes built in past years, coupled with Auckland’s population growth, has created a situation where supply remains the issue, and this is reflected in the prices being obtained," he said.
May’s average price was 7% above the average selling price for the 2011 calendar year.
"The shortage of available homes for sale is being felt right across Auckland, and in all price ranges."
Detailed statistics on Barfoot and Thompson's sales by region show a significant lift in sales volumes and prices in the richer central and northern suburbs of Auckland.
Sales Volumes in the Central Suburbs, which include Mt Eden, Epsom, Parnell and Ponsonby, rose 20% to 1,911 in the 12 months to May from the previous year, while volumes in Central Auckland, which includes apartment sales, have fallen slightly to 253.
The average price in the Central Suburbs rose 9% in the year to May to NZ$664,297 from the previous year.
North Shore volumes rose 23% and average prices rose 3.6% in the year to May.
Average prices were flat to lower in Central Auckland, Rodney, Franklin/Manukau, South Auckland and West Auckland.
There were 91 homes sold for over NZ$1 million in May, up from 46 in April and 50 in May 2011.
ASB's Jane Turner comments
ASB Economist Jane Turner said the figures showed a gradual lift in housing turnover with sales in the three months to May up 4% from the three months to February.
"Strong sales prices are starting to attract new listings on the market, which also increased strongly in May. Nonetheless, the overall level of new listings remains low and not sufficient to meet demand. We continue to see a decline in overall housing stock available for sale. Tight supply conditions will continue to place upward pressure on house prices," Turner said.
"The housing market continues to recover, and the recent drop in fixed-term mortgage rates below floating rates is likely to provide further support to housing demand in the coming months," she said.
"However, NZ’s housing market remains undersupplied. Until we see a meaningful increase in construction in Auckland and Canterbury, these pressures will continue to place upward pressure on house prices," she said.
Turner said stronger house price pressures presented and upside risk to the RBNZ’s medium-term inflation outlook.
" Strong house price increases could encourage a change in behaviour of households, with a move away from saving/faster debt repayment. In addition, the increase in house prices and construction costs could spill over into generalised inflation pressures as well," Turner said.
"The RBNZ has recently characterised recent housing market developments as ‘in line’ with expectations. However, if these pressures are stronger, and persist for longer, the RBNZ will become increasingly concerned. For now, the RBNZ’s immediate focus will remain on the near-term downside risks to the outlook stemming from the Eurozone debt crisis."
(Updates with detail on regional moves within Auckland, Comment from ASB, interactive chart, My video, An interview with Peter Thompson)