Barfoot & Thompson reports record $657,912 average house price and record $600,000 median price

Auckland's largest real estate firm Barfoot & Thompson reports that both its average and median house prices hit record highs last month.

B&T accounts for around 40% of all sales in the Auckland market and so if a reliable indicator of sales patterns and trends in the region.

In September B&T's median sales price hit $600,000, which was a whopping 6.9% increase, or $38,500, on the August median. It is also up 14.3%  compared with a year ago.

The new record average sales price high of $657,912 was an increase of a little more than $10,000 or 1.6% in the past month.

The number of sales in September at 1105 was up 14% on the figure recorded at the same time a year ago, though down 7.9% on that for August 2013.

Plenty of heat

The new figures showing that the Auckland market is still generating plenty of heat come hot on the heels of the introduction by the Reserve Bank of "speed limits" on high loan to value lending (LVRs). While the LVRs move is primarily aimed at preserving financial stability, the RBNZ is hoping it will cool prices.

B&T's managing director Peter Thompson said that month by month variations in sales numbers were common, "and if the Reserve Bank’s new regime was to have had an impact, I would have expected more - rather than less - sales in September as buyers sought to get in ahead of the new deposit requirements".

One of the main reasons prices have been rising appears to have been a big squeeze on the number of houses for sale, with inventories of available houses at or near record lows.

Realestate.co.nz reported this week that national housing inventories were still very low.

'Excellent listings'

Thompson said B&T had 1636 new listings in September, which was "excellent", and while down 4.3% on the listings for August was up 29.2% on those for the same month last year.

"At month’s end we had 3191 listings on our books, our highest number since April, but still down 14.5% on the number in September last year."

ASB economist Daniel Smith said that B&T's new listings jumped higher by over 30% in July (on a seasonally-adjusted basis), and have held up close to that level over August and September.

"That suggests that strong house price growth is provoking a supply response. As a result of more homes coming onto the market, the total number of available listings has risen over the last few months but remains at a very low level overall."

Supply constraints 'for years'

Smith said with Auckland’s supply constraints likely to persist for several years, ASB expected house prices to continue increasing.

"However, the rate of increase is expected to slow; we anticipate the annual rate of growth will peak in Q4 2013/Q1 2014. The recent lift in listings will contribute to that process, as will the RBNZ’s new restrictions on high-LVR mortgage lending."

Westpac senior economist Michael Gordon said he suspected that house prices had now risen (and expectations of further capital gains to come had narrowed) enough to prompt more homeowners to put their properties onto the market.

"This is a step in the right direction for those who are concerned that Auckland house prices are rising too quickly. But it is only a small step. The Auckland market had become exceedingly tight, with the stock available for sale hitting decade lows. We would have to see many more months of elevated listings before we could say that the market had normalised."

Gordon said the Realestate.co.nz figures indicated that while the stock of homes for sale was picking up in Auckland, it was still "crunching lower" in the rest of the country.

"If this trend continues, we could see nationwide house price growth start to converge - slowing in Auckland, but possibly accelerating in other parts of the country. "

Thompson said it could be between three and six months before it would be possible to judge whether the LVR changes introduced from October 1 would have any medium term impact on prices or sales turnover.

'Impact on sales'

"The school holidays will occupy the first part of October, and this always has an impact on listings and sales.

"It may well take to the end of November or year end before a clear picture of what impact, if any, the new requirements have on market activity and prices."

During September Barfoot & Thompson sold 379 homes for less than $500,00; 384 for between $500,001 and $750,000; and 150 for in excess of $1 million.