Median prices of Auckland urban fringe properties drop 8% in just a month

Median prices of Auckland urban fringe properties drop 8% in just a month

By David Hargreaves

A month does not a trend make, but life on the fringe was suddenly looking less appealing for Aucklanders in October.

Figures for the three months to October from the Real Estate Institute show that the median price for lifestyle blocks sagged by some $70,000 - or 8% in the latest month.

The figures are calculated over a moving three month period.

In the three months to September Auckland's median price for lifestyle blocks stood at $870,000 - a record high and some 26% higher than the median price for the same period in 2012.

Just one month on, the three-month median price to October stood at $800,000 - still higher than for the same time a year ago, but just by 12.7%.

There were 356 properties sold during the three months, which is up 17% on the number for the same time a year ago.

But here again, it is worth noting that the latest year-on-year increase compares with a year-on-year increase in the number sold of 26.5% in September, 31% in August and 32.8% in July.

It has appeared likely that at least some of the activity around Auckland in recent months has been fuelled by so-called land-bankers looking to cash in on any further future spread of Auckland as the city looks to address a perceived shortage of about 30,000 houses.

The Auckland Council has recently notified its new Unitary Plan, to take effect in three years, as well as signing up for a new Auckland Housing Accord with the Government. The accord is targeting the building of 39,000 new houses within three years.

A mixture of fast-tracked "greenfield" and "brownfield" new developments are promised.

The Government and the Auckland Council recently announced the first of the "special housing areas" in the region that are to be fast-tracked for development. More of these special housing areas will be identified publicly in coming months.

The Reserve Bank introduced from October 1 new "speed limits" on high loan-to-value lending for residential properties, mainly to protect financial stability but also with an eye on particularly the heated Auckland market.

The REINZ's latest monthly residential sales figures showed new record prices, but the moderate sales figures suggested there may have been a significant, though not yet fully quantifiable, impact from the LVR limits.

Because of the large size and therefore cost of lifestyle blocks and the relatively small numbers sold month-by-month, it would unwise to read too much into the latest figures. The lifestyle block figures can be by their nature very volatile. But at the very least, the sheer size of the drop in prices and the apparent moderating in sales growth, will make next month's figures very much worth watching.

On a national basis, the median price for lifestyle blocks rose to $489,500 compared with $460,250 for the same period a year ago. The median price for lifestyle blocks rose by 0.1% in Waikato, and by 17.6% in Canterbury. Compared with September 2013 the median price rose by $9,500 (+2.0%). 

REINZ rural spokesman Brian Peacocke said a number of regions had "confirmed a hardening of attitude from purchasers as interest rates increase and the impact of LVRs come into the equation".

"In all regions, good properties are selling well apart from those cases where vendor expectations are ahead of the market."

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