Asking prices on Trade Me Property are still going up but not as quickly as they were

Asking prices on Trade Me Property are still going up but not as quickly as they were

The rate at which house prices are rising is starting to slow, according to Trade Me Property.

The average asking price of residential properties advertised on the website hit a new high of $590,850 in June, up from $584,400 in May.

However the rate at which asking prices are going up  is slowing.

May's average asking price was up 9.2% compared to May last year, while June's average asking price was up 8.5% compared to a year earlier.

The trend was most noticeable in Auckland where the average asking price of properties advertised on the website hit a new high of $848,100 in June, up 0.7% compared to May's asking price of $842,550.

However the average Auckland asking price in May was up 12.7% compared to May last year, but in June that had dropped back to 8.4% compared to a year earlier.

"Auckland's asking prices are up almost $75,000 on this time last year but that is significantly down on where things were at in August 2015, when the average asking price leapt $130,000 in a year, Trade Me's head of property Nigel Jeffries said.

"For now it looks like the incredible surges we've seen in Auckland may be slowing down.

"That's not to say the market is stalling, but we're seeing the market take a bit of a breather after sprinting ahead for months."

And prices are rising more quickly in several other parts of the country than in Auckland.

The biggest increase in average asking price over the last 12 months has occurred in Otago, where they have increased by 23.4% in the 12 months to June, followed by the Waikato +21.9%, Hawkes Bay +17%, Manawatu/Whanganui +17%, and Northland +14%.

The only region to record an annual decrease in the average asking price was Marlborough where it was down 2.4% compared to June last year.

Home units continue to be popular, with the average asking price of Auckland units rising by $87,000 (17.5%) over the last 12 months to hit a new high of $589,000 in June.

"Units are popular with investors, they're cheaper than a lot of housing options but they're still popular with renters and they sell well," Jeffries said.

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41 Comments

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Maybe the whinging will finally stop by the end of the year and the reporters will have something else to focus on.

Not if it all crashes in a screaming heap. They'll probably have more to write about.

This is certainly not going to occur. If prices drop, people will not list ... which will push prices up again. Auckland is stuck in this no-mans land between the 1/4 acre dream but no 1/4 acres. One side (or both) must give.

They will list. Lots of people are in it for the gains. If there are no gains, there is no reason to keep it.

The housing bubble without precedent.

actually a major decline in Auckland prices is inevitable. The question is how much and how soon.

If it happens in 100 years time do you think you and I will still be talking about it then?

Costs too much to build a small house, so people build big ones instead. As a result the percentage of houses which would typically be for first home buyers is getting smaller. This are also the ones that have the best rental yields so they complete with investors.

Your argument is flawed. Many will want to get out at the peak of the cycle, and buy in again at the bottom. This could very well lead to a sharp price correction.

If the repeat of the last cycle occurs the banks may very well shut up shop. I.e. they won't lend to each other. This will exacerbate the issue.

During the last downturn the Aussie banks were strong. We benefited from this stability and the Australian mining boom indirectly. This assisted NZ and softened the cycle. Australia now has major issues rebalancing its economy. The ratings agencies recently all signalled rating downgrades.

When the bubble does burst Prices here may stagnate for a decade

What readers here may also fail to grasp is how well respected JK is internationally. Financial markets love stability. We have had a stable, albeit benign economy for 9 years now.

If Labour and the Greens were to get in....

All bets are off.

Nope - next year is Nats vs Labour Greens. Housing will still be top of the pops

I doubt the whinging will stop until the average income earner can afford to buy the average home. Alternatively housing will end up in the hands of the few and the many will rebel. This is the danger of where we are heading.

Like the French revolution?

Kiwis will not revolt, they are too law abiding and quite frankly a bit soft on too many issues. Australians have more guts and don't put up with the PC crap like we do over here. Maybe if you wanted to make a statement, find one of all these thousands of un lived in homes that are being left unoccupied by overseas owners and just move into one of them. Yep just get the locks changed and move in, don't trash the place actually look after it and clean it up, your not paying rent after all so treat it like you own it.

The problem is the average house isn't sustainable. The average new build how is unaffordable for many people even if the land was free. The solution is to build smaller, smarter homes. Terraced houses and apartments etc. The average size of a new build in Auckland is huge and is not going to be affordable for the average first home buyer. Who is going to build a cheap house on an expensive section? It doesn't make sense to. All the new builds I've seen recently are expensive and large. Until the new builds become smaller, the problem will get worse. I can buy a 3 br 140 sq mtr house for $975k or a 240 sq mtr house for $1.1m on the same site. If this was structured 2 units of 120 sq mtrs then the cost might be $1.2m but then that is $600k per house instead of $975. The council rules etc will make the building of 2 instead of 1 uneconomic and as a result the developer will build a 5 bedroom, 3 bathroom house and sell it for $1.25m or something. While this trend continues, housing won't get cheaper. If demand dries up they will stop building but prices won't drop much. Maybe the council can look to scale the developer contributions etc to the property size rather than a fixed cost. Eg a new water connection could be $x per sqr mtr of house or bedroom etc.

The problem is Dave they wouldn't be building big expensive houses unless they could easily SELL THEM. There are people that have been let into our market where price is no object, they don't want to buy shoeboxes or we would be building them all over the place. Houses around me have just got bigger and bigger and more and more expensive. It would appear that people expect 5 bedrooms, two or three bathrooms these days. Also we simply cannot build decent "Livable" apartments in New Zealand and most of them resemble a Hotel room, if we built them with a decent amount of space then more people like FHB may consider them an option.

I was looking at building a house in the last couple of months. $975k for 3 bedroom 140 sqr mtr and $1.150 for 5 bedroom for 240 sqr mtrs. Better value for money buying the 5 bedroom. The foot print of both was 140 sqr mtrs so the outdoor space would have been the same. It is no wonder people build big houses. 2 120 sqr mtr houses for $650k each would have been possible if it wasn't for the council fees and rules. The stupid thing is the same number of people could live in them putting the same load on the infrastructure. Until the building of modest homes starts, prices will be expensive.

Do those build prices include the price of the Land?

The whinging of renters won't stop until the whinging of property owners starts. As history shows we kind of take it in turns.

Having a home to live in is a basic human need, I think you need to listen carefully to what you think is whinging. It is brewing ANGER as more and more people are unable to afford that.

Yes its a basic human need but its not a basic human right to be able to buy a house. Put simply if your not earning enough you rent. I have also seen a number of posts of people or couples on really good incomes that somehow think they cannot afford a house. Buying a house affects your lifestyle, it always has for most people and so its many people expectations that have skyrocketed even faster than house prices that is the cause of many FHB problems.

Agree... it can't be a "human right" to be able to buy a house anywhere you fancy. Things will change and suburbs will become more expensive or less expensive as time progresses. It would have to be a very odd setup indeed if you could always buy where you wanted, guaranteed. Unfortunately with high immigration affluent suburbs will inevitably expand in desirable cities - in the case of Auckland, expanding to cover the entire city.

I still can't get over the commenter who claimed a net income of 300k and still felt houses were unaffordable. It's like housing should be free or something.

its winter always a slow time for house sales, who wants to sell a house where you can see all the leaks

To call this a slow down is a nonsense. Statistics go up and down and never in a straight line.
If a slow down occurs continuously over the next few months then you can claim it is real.
One number does not a statistic make.

Absolutely correct. Probably looking at the 5yr stratified growth trend is a more reliable indicator of market trends... and that shows an ongoing boom.

Nonsense

Nonsense

Absolutely. I wouldn't call an 8.5% year-on-year increase in average asking prices all that slow either - it is 90% of our after-tax household income! The $6000 increase in the last month was also 90% of our after-tax income for the month.

Bang on Big Daddy. The overall trend is still pointing up from where I view the world.
Case in point, 64 Donovan Street, BlockHouse Bay - a two bed unit with internal garage sold few days ago for 865K I have been advised.

Theres a sucker born every minute.

This sort of place ticks quite a few boxes. Brick and tile with a concrete base and aluminium joinery just stays very stable and good looking with little maintenance. An internal access garage could potentially be a third bedroom although also sought after by retirees or single women.
https://www.barfoot.co.nz/573394

Here's a plan, sell it all to Chinese nationals, then when the south china sea thing blows up just confiscate it and hand it out for free, reckon we're already a ways down that road......

This Auckland situation is so OTT that I just hope they keep going up up up and away !! ....... as the higher they go, the further they fall !! .... and if they do, the world will keep spinning - don't buy that line from the property "spruikers" that you will "lose your job" as if you lose your job, they lose their rents !! .... then their good friends now - the banks, will turn on them and come chasing them for the mula !!

Much as I would like to see a correction in the AKL market there still remains a massive shortage so I can't see much changing in the near term

Over 7000 Auckland homes for sale , and there is a shortage?

You sound like John Key saying there is no shortage! :)

Up up and away yay!

Things are progressing nicely. A bit of a slow down in the upward trajectory and we can put our seats back and cruise for a bit.

Terminal velocity , trajectory will follow a curved parabolic path , now which part of the curve do you think the Auckland housing market is currently at.

"Errr captain there seems to be a problem with the landing gear"

No worries, still plenty of fuel to maintain altitude. We may even get into orbit, then we will never need to land.

Yep Auckland house prices are now heading into orbit. Those who have bought a house should recline their seats, relax and open a bottle of champagne and enjoy the view.