UPDATE: Asking prices for NZ properties plateau nationwide, Trade Me survey says
(Recasts with added Jeffries comment from 3rd graph, fixes West Coast movement in 5th graph)
By Fiona Rotherham
Oct. 2 (BusinessDesk) - Affordability issues for buyers has kept asking prices for properties nationwide at subdued levels for the fifth consecutive month, according to the inaugural Trade Me Property Price Index launched today. The average asking price for properties rose just 0.1 percent month-on-month in September.
The new index measures trends in asking prices for more than 20,000 residential property listings on the online auction site over the previous three months. The September figure contrasted with strong rises earlier in the year including the peak in March when asking prices were up more than five per cent.
Trade Me Property Nigel Jeffries said the Auckland market in particular appeared to have been hit by some affordability steps so the expectation is that there won't be further dramatic climbs in prices as were seen earlier this year.
"Regionally there has been a bit of catch up behaviour with the metros and there could be further climbs in some regions to come," Jeffries said.
Overall there were six regions that had double-digit increases in average asking prices during the past year with Taranaki leading the pack with a 23 percent increase and then Gisborne with 19 percent. The much-reported pressure of demand from buyers in Auckland and Canterbury saw average asking prices in these areas rise 10 percent and 13 percent respectively. The West Coast had the weakest result with a decline in asking prices of 9.5 percent year-on-year.
Across all property types the average asking price in September was $487,650, according to the site's data, which was a year-on-year increase of 13 percent. Asking prices peaked at $491,050 in March. Looking back over the past five years asking prices have risen 26 percent, but most of that occurred in the past two years.
"In recent months we've seen that pace of increase all but stutter to a halt," Jeffries said.
Although the loan to value ratio lending restrictions imposed by the Reserve Bank has kept a lot of first home buyers out of the market, most of the plateau in the past few months was underpinned by a slow down in asking prices for larger houses. The average asking price nationwide for homes with five or more bedrooms was up only 9 percent compared to a year ago to $854,000 while one to two bedroom houses increased more than 15 percent over the same period to $318,400.
"The trend is most noticeable in Wellington where larger houses showed a year-on-year decline of 5 percent, despite the overall market in the capital ticking up nearly 7 percent," Jeffries said. Anecdotally, Jeffries has heard from real estate agents that many Wellington baby boomers have been selling the family home in central suburbs and buying apartments in the city but this oversupply of larger homes had depressed prices.
By region price growth in Auckland is being pushed along by non-traditional forms of housing with both townhouses and units seeing asking price growth outstrip traditional residential houses. That's reflecting the strong demand for affordable higher-density living options in the city. The average asking price for townhouses nationwide was up 11 percent year-on-year to $475,800 while the average asking price for units rose 14 percent year-on-year to $342,000. There was explosive growth in Wellington in asking prices for apartments, up 27 percent to $467,200.
Last week Veda reported its data showed that Generation Y - defined as Kiwis aged under 28 - appeared to have given up on home ownership, with fewer applying for mortgages than in previous years. But Jeffries said there were still affordable houses in outer suburbs in the bigger cities but a lot of Gen Y had high expectations. "They tend to want to live where their parents have lived but it's unrealistic for a 26-year-old to expect to live in a big house in Remuera, for example," he said.
The index is produced from data on properties listed on Trade Me Property in the three months leading up to the last day of each period, with each period's value being a truncated mean of three months' worth of listings to better reflect trends rather than monthly fluctuations. Truncated excludes the upper and lower 10 per cent of listings by prices and averages the expected sale prices of the rest.
Trade Me ran into trouble late last year with a group of real estate agents boycotting the site after it announced fee hikes for the industry to advertise property listings. Previously agents paid a fixed subscription for an unlimited number of listings. After further consultation with the industry Trade Me changed the fee structure in August, differentiating between metro and regional agents and offering a choice between a monthly subscription or pay per listing. Jeffries said listings had increased by around 20 per cent since then to 86,000 now although some regions were still reluctant to pay the increases.