No signs of residential property market retreat

Despite the doom and gloom in Auckland’s property market, Barfoot & Thompson claims its figures show the two-month hibernation is over and sales have increased by nearly 20% while average and median prices are firm.

Barfoot & Thompson director Kiri Barfoot says the signs are small but it indicated the market is holding firm and buyers are returning. “There are certainly no signs of a general market retreat.”

The company sold 757 properties last month – the highest number of monthly sales since August. They were 9.7% higher than the average sales number for the previous three months.

Ms Barfoot says the average price at $913,244, and the median price at $830,000, were in line with prices over the previous three months.

“While those numbers are down on their equivalents in November last year, that was when the market was close to reaching its peak.”

She says last month’s trading is a sign that at current values buyers are returning to the market.

Last month Barfoot & Thompson listed 1955 properties, a third higher than the average over the previous three months.

“It brought the number of properties for sale at month end to 4838, the highest number in more than five years,” Ms Barfoot says.

“There is now a quarter more properties on the market than at the same time last year.”

At the top end of the market, there was a significant rebound in the number of properties sold for more than $1 million. Fifty-five properties were sold for more than $2 million and a further 262 for more than $1 million, the highest number of high-end property sales since May.

A similar pattern was evident in the lifestyle and rural sectors, with sound sales numbers in Mangawhai and Wellsford in the north and in Pukekohe and Papakura to the south. Properties valued at more than $2 million attracted strong interest, Ms Barfoot says.   

“Sixty-two rural and lifestyle properties were sold last month, the highest in a month since March.”

Ms Barfoot says while interest from local developers and land bankers is returning, there is still a degree of hesitancy as they await a clearer understanding of future government policy. 

New Zealand's overheated housing market – considered a risk to financial stability – has slowed over the past year as Reserve Bank restrictions on more highly-leveraged mortgage lending and tighter credit criteria being demanded by banks made it more difficult for borrowers, even as low interest rates made it easier to service much larger debts. Housing market sentiment had also been weighed down by the change in government as Prime Minister Jacinda Ardern looks to implement policy to restrict the sale of homes and property to foreign investors.

Last week the Reserve Bank announced plans to dial back the restrictions on the level of new bank lending to owner-occupiers with less than 20 percent deposit and leveraged residential property investors, citing recent moderation in the housing market as a good time to start moving. The changes, however, are expected to have a "negligible" impact on interest rates, according to acting governor Grant Spencer.

(Additional reporting BusinessDesk)