Have Auckland's house prices turned?

After five months of setting ever increasing record prices, Auckland house prices eased back last month.

The median price fell to $755,000, $2000 lower than it was in July and $9000 or 1.2% below the median price over the previous three months.

The average price for homes sold dropped 1% last month to $821,079, Barfoot & Thompson managing director Peter Thompson says.

“There were signs that the rate of price increase was cooling in June and July, and August’s figures have confirmed that winter has contributed to prices declining," Mr Thompson says.

“We are now at the crossroads in terms of where prices go. With the coming of spring we can expect pressure to go back on prices as factors which have led to record prices in the first place, such as low mortgage rates, shortages of supply and demand from a growing population, still remain.

He says countering this is the pressure the Reserve Bank and the government is applying by way of new rules and regulations to keep a lid on Auckland price increases, and concerns about worldwide economic stability.

“The most likely scenario is that prices will increase modestly in coming months from where they are.”

Barfoot & Thompson’s 1314 sales in August were the highest for the month in more than 15 years, and 44.6% higher than in August last year.

Mr Thompson says the 2123 new listings in August was exceptional, the highest number in any month for more than 10 years.

“In spite of this, the 2957 available properties at month end were only modestly higher than July’s 2802.

“The 375 sales of properties in the million dollar plus category were the third-highest on record, while properties in the under $500,000 category, at 14.3% of all sales, were in line with those for previous months.”

Auckland's housing market has been a persistent headache for policymakers who are trying to make up for a lack of building work following the collapse of the mezzanine finance sector last decade, which funded a lot of residential development, in the face of record inbound net migration and low interest rates.

That's been pushing up prices to levels the Reserve Bank sees as straining the country's financial system, and governor Graeme Wheeler will impose more lending restrictions on residential mortgages in the country's biggest city later this year.

(With additional reporting from BusinessDesk)