Nov 6, 2017
The Auckland property market appears to have reverted to a “normal’ state. Since the mid-1970s the average house price in Auckland has risen from $30,000.00 to over $1,000,000.00. House prices are 33.33 times more expensive than they were in 1975. That represents a $23,000.00 pa increase each year on average.
However that’s not the way it works from year to year. In May 2013 the average Auckland house price was $631,000.00. In May 2017 it was $1,044,000.00. That was $103,250.00 per annum. As it can easily be seen this represents an increase of 4 times the average annual increase since 1975. The last four years have been extraordinary to say the least.
The fallout from these increases are well documented. Lack of availability of affordable housing in Auckland, a massive number of people seeking to live elsewhere, homelessness, investors sitting on stock, an increase in “flipping’ offences by agents. The list goes on.
The causes are also well known. Low interest rates, a decrease in unemployment figures in Auckland, record immigration and a consequent lack of housing stock versus demand, Council inability to keep up demand for consents in a timely fashion, the weathertight homes debacle which has lead to a shortage of companies being able to build new homes.
So what has changed?
The government for one. The new labour government appears, like all left leaning governments, to want to tackle the issues more proactively itself. They are already talking about freeing up more state land for housing, tax assistance for first home buyers as well as restrictions on foreigners being able to purchase property.
National, like all centre right parties, tended to lean more towards persuading the private sector to work out a solution without government intervention. Without giving anything away as too which approach is the better it is a little ironical perhaps that in the last year or so the approach which National and its coalition partners took was seeming to bear fruit. In the last year we have seen a voluntary tightening of lending criteria by most of the major banks prompted no doubt to a certain extent by LCR rules formulated by the Reserve Bank. House prices in Auckland have levelled off to a significant degree.
Barfoot and Thompson reports that residential sales activity in Auckland resulted in 13586 sales in 2015 and 11709 in 2016. This has seen a corresponding decrease in month to month increases in average value as well.
So what is likely to happen over the next few months?
Going into Christmas there will undoubtedly be increased activity which, with the traditional respite over the festive season should flow into March or April of next year. With the new government being unlikely to change much in its first 100 days it is reasonable to assume that sales activity will level off during the winter and follow the same cycle next year. In short it is business as usual at least for the next year or so.
There is never a good time to buy or sell. As long as buyers research properly and sellers do the same the old adage usually applies: buy and sell in the same market and look at property as a long term investment.
We at ACRES have been around now since 2011 assisting lawyers to sell property by providing them with an experienced agent and sound legal advice throughout the process. Our lawyers charge a fee which is fair, reasonable and usually well below that charged by REINZ affiliates. Further we have never had a complaint regarding our fees, practices or integrity. Not a bad record considering the numbers of agents being investigated and prosecuted by the Real Estate Agents Authority on a weekly basis.
We look forward to hearing from you if you have property to sell for a free quote and appraisal.