Kiwi house prices continue record-breaking climb

12 May 2016

Kiwi house prices continue record-breaking climb

The New Zealand property for sale market looks set for a warm winter according to the latest Trade Me Property Price Index. In April, average asking prices climbed to a record high of $585,000, rising 2.1 per cent since last month, and up 8.4 per cent on a year ago.

Head of Trade Me Property Nigel Jeffries said house hunters should expect to pay a “significant chunk more” when compared to this time last year. “It’s not good news for those looking to get into their first home with average asking prices up more than $45,000 over the last 12 months. On the other hand, sellers are in good stead as the reignited market continues to burn up.”

The average asking price of a typical New Zealand property has leapt 46 per cent over the last five years, from $402,150 in 2011 to $585,000 – an increase of more than $36,000 per annum.

“Since April 2011 the average asking price is up almost fifty per cent and the increase of $36,000 is pretty close to the median annual wage after tax in New Zealand. That shows properties are now earning more than the median amount earned by a Kiwi employee. It’s good news for property owners but a serious challenge for those aspiring to get a foot on the property ladder,” Mr Jeffries said.

Auckland sets new records

The Auckland property market continued its ascent in April, up to a new record average asking price of $843,150, an increase of 1 per cent on March and up 13.8 per cent on a year ago.

“The Auckland property market has yet again set a new record for the average asking price, shooting up more than $100,000 over 12 months, way ahead of the median Auckland salary before tax,” Mr Jeffries said.
He said Auckland’s average asking price had risen more than two-thirds in the last five years. “Back in early 2011 a typical Auckland property had an average asking price of $506,000. Fast-forward to today and that property has an average asking price of $843,000 – that’s $337,000 higher which means it has jumped up more than over $5,500 every month.”

Several regions surpassed Auckland in year-on-year growth in average asking prices, with Bay of Plenty leading the pack, up 15.8 per cent in April to a new record high of $522,400.

“We saw average asking prices boosted by more than $70,000 over the past 12 months in the Bay, again way ahead of the typical salary in the region,” Mr Jeffries said. “Over the past five years, average asking prices in the Bay have risen 37 per cent, with the lion’s share of this over the last two years when more than $100,000 has been added to the average asking price.”

The Waikato market continues to respond to the “halo effect” of Auckland’s boom, with a 12-month rise in asking prices of almost $50,000, landing at $434,850.

“Auckland’s market continues to make waves on nearby regions. In the Waikato, we’ve seen an increase in average asking price of 13 per cent compared to a year ago, pushing the five-year increase up 24 per cent,” he said.

Other regions with significant increases in average asking prices over the last 12 months were the Hawke’s Bay, up 15.6 per cent to $471,750, while Mr Jeffries said Otago had seen “a noticeable rebound” from early last year where prices fell for eight consecutive months.

“Since January, the average asking price in Otago has ticked up 11 per cent to $443,900 in April – a positive turnaround considering how unsettled things were at the start of 2015,” Mr Jeffries said.

Taranaki was the only region with a year-on-year slip in average asking price in the three months to April, down 6.6 per cent to $355,250 but ahead of its low point of $318,250 in December last year.

No major trends by property size

Mr Jeffries said there was little change in average asking prices across different property sizes in April. “Smaller houses have shown strength for quite some time, but this has levelled out. Christchurch continues to be the weakest metro market, with medium-size houses seeing a year-on-year decline in average asking price.”

Table 1: Average asking price by property size & region, April 2016 vs April 2015

Auckland’s dominance in the apartment market continued in April, leading the pack in average asking price and representing over two-thirds of apartments listed for sale across the country.

“In the three months to April the average asking price of an Auckland apartment rose to $560,900, up 21 per cent on the previous year. It’s not back above the $601,850 peak seen in November last year, but has risen strongly from a low of $514,000 in February,” Mr Jeffries said.

Over the past five years Auckland apartments have seen their average asking price rise by close to $250,000 (or almost 80 per cent), from $312,550 in April 2011 to $560,900 in April 2016.

Table 2: Average asking price by property type & region, April 2016 vs April 2015

ENDS

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