Auckland's overheated housing market is losing steam
By Tina Morrison
March 14 (BusinessDesk) - Auckland's overheated housing market is slowing, with price growth lagging behind other main centres as it takes longer to sell a property and the number of houses available for sale increase, according to the latest monthly data from the Real Estate Institute of New Zealand.
The median number of days it took to sell a property in Auckland - a gauge of underlying demand - increased by six days to 49 in February, up from 43 in February last year and the highest number of days it's taken to sell a property in Auckland for nine years, according to REINZ. Nationally, the median number of days to sell a property increased by four days to 44 compared with February last year.
In Auckland, the number of properties available for sale increased by 11 percent compared with a year earlier, ahead of a 3.2 percent nationwide increase, while the REINZ house price index showed property values in Auckland advanced 1.1 percent over the year, lagging behind a 3.9 percent nationwide increase. Auckland's median price rose 3.7 percent to $858,000 from a year earlier, compared with a larger 6.9 percent gain to $530,000 for median prices throughout the country.
Inflated house prices in Auckland have been on the radar of officials over recent years prompting the government and the Reserve Bank to introduce new measures to quell the risk from a housing bubble. Reserve Bank restrictions on more highly-leveraged mortgage lending and tighter credit criteria being demanded by banks made it more difficult for borrowers, while housing market sentiment has also been weighed by new government policies to restrict the sale of homes and property to foreign investors.
"Auckland's median house price while continuing to slowly creep upwards, is clearly showing signs of moderated growth rather than the double digits we saw throughout 2016 and 2017," REINZ chief executive Bindi Norwell said in a statement. "This is far more positive for the region as we know double-digit increases are not sustainable in the long term."
The number of auctions, which is generally an indicator of a heated housing market, shrank to 12 percent of all sales across the country from 15 percent a year earlier. In Auckland, 356 properties were sold by auction last month, down from 462 in February last year.
Norwell noted that the REINZ house price index increased in 11 of the 12 regions, with nine regions and the overall index posted a new high in February, highlighting the strength of the nationwide property market.
The number of properties sold across New Zealand in February increased 1.2 percent to 6,373 with nine of 16 regions showing an increase in property sales.
Norwell said the sales data showed "strong regional growth in the majority of the country", with Nelson recording the highest number of properties sold in nearly 11 years and the West Coast posting the highest number of properties sold in just under six years.
"From a national perspective, we've seen the number of properties sold year-on-year increase for two months in a row now," Norwell said. "It’s not quite enough data to call a trend, but with nearly 300 more houses sold for the year-to-date when compared to 2017, it’s certainly a positive sign for the industry."