Is the Auckland market changing gears?
During the month of October, several regions around the country reached new record median prices, while at the same time, Auckland stopped to take a breather.
While the volume of property sales was up 4% from October last year, they fell 19% compared to September. While Auckland may look to have stopped in its tracks, it had been running unusually hard through most of the year. A recalibration of the number of sales was not unexpected. The volume of sales has resumed to a level that is in line with the number of transactions recorded in the month of October since 2012.
A drop in the number of sales since the beginning of October correlates with the introduction of new bank rules – the requirement to have an IRD number and bank account to purchase property, along with the introduction of 30% deposits for property in the Auckland Region. Although these measures have dampened some consumer sentiment, record low interest rates continue to prop up buyer demand.
Recent housing confidence surveys indicate over half the respondents still believe house prices will continue to increase over the next year. One of the key indicators underpinning the Auckland market is the supply/ demand imbalance – Auckland’s population is growing at a rate greater than the rest of the country but supply levels continue at a significant lag.
We head into Christmas with the key fundamentals of Auckland’s housing market still intact.