Auckland’s once-heated housing market is now burning brightly in the provincial regions. How long before they are hit by Auckland’s zombie house market?
Data released today by realestate.co.nz shows the lift in July’s national average asking price for a home was dominated by the provincial regions.
The site saw all-time asking price highs in the Taranaki, Otago, Southland and Hawke’s Bay regions since records began in 2007.
Head of Trade Me Property Nigel Jeffries says, “The Waikato, Wellington and Otago regions hit record high average asking prices.” He added that Waikato was another standout performer, hitting a new record for the fourth consecutive month after the average asking price rose 7.8% to $591,550.
Wellington was a standout performer too. “Property prices in the capital have continued their record-breaking streak after the average asking price rose 11.6% year-on-year to $658,250 – an annual increase of $68,000.”
Jeffries says property prices in the Wellington region took off in mid-2016 and have showed no sign of slowing since.
Who do you believe?
“We are a long way from the peak of the heated property market when it was all about the Auckland region,” says realestate.co.nz spokesperson Vanessa Taylor.
“However, we can’t ignore the fact that the Auckland region is our biggest market and with the average asking price lifting for the second month in a row, we’ll be watching with interest to see what happens during the rest of this quarter,” she says.
Contrasting this optimistic news of rising asking prices in Auckland, Trade Me says that Auckland property prices have experienced the biggest drop in five years.
According to the latest Trade Me Property Price Index, the brakes have been applied to the Auckland property market after the average asking price fell 1.9% to $901,650, the largest year-on-year percentage decrease since 2014.
Trade Me’s Nigel Jeffries said while this decline may seem relatively small, it shows that after years of incredible growth the Auckland property market has hit a slump. “Property prices in the region have been flat for a number of months but now it seems the Auckland property bubble is losing air and prices are on the decline.”
“With the government’s restrictions on foreign buyers and new regulations for landlords, the Auckland property market is seeing less overseas buyers and investors which is cooling property prices.”
“Every house size in Auckland saw a dip in asking prices when compared to last May as the region’s property market cools,” said Jeffries.
He said that on the whole, there is still interest in the Auckland market with the average number of listing views up 2.3% on May last year. “The demand is there but buyers are unwilling to pay the huge prices that could be demanded 12 months ago – sellers will need to reset their expectations a little at the moment or hold on until prices track north again.”
Good news for first home buyers
This is all good news for first home buyers in Auckland, with affordability ever-so-slowly improving as prices ease and wages inch up.
Zombie house market
Opportunistic buyers thinking they can circle like vultures waiting for a 20% drop before snapping up a bargain are likely to be disappointed though. Apart from the top end of Auckland’s house market, which experiences bigger swings than the mid-market, we are more likely to see subdued prices into the medium term.
In other words, house prices sliding sideways while affordability gradually catches up. Be prepared for a 7-10 year zombie house market.