Auckland housing market continues to strengthen

New figures show the Auckland housing market continuing to strengthen, with buyers said to be facing a lack of choice.

New figures show the Auckland housing market continuing to strengthen, with buyers said to be facing a lack of choice.

Real estate company Barfoot & Thompson said it sold 889 residential properties in Auckland last month, compared to 723 sales in April and 12.2 percent more than a year earlier.

The company listed 1169 new properties in May, up 13.2 percent from April but down 15 percent from a year earlier. At the end of May the company had 5249 properties on its books, the lowest number for 20 months.

But the average price last month of $529,284 was down 2.8 percent on April and 2.5 percent lower than in May 2010.

Barfoot & Thompson managing director Peter Thompson said the combination of rising sales and an easing average price demonstrated prices were not starting to overheat.

"The major issue facing the Auckland market remains lack of choice for buyers," Mr Thompson said.

A contributing factor to the fall in average price in May was the relatively low number of sales of houses for $1 million or more -- down to 13.6 percent from 15 to 16 percent usually.

"Again it is lack of choice that is affecting this market segment as there are active buyers looking in this price bracket," Mr Thompson said.

ASB economist Jane Turner said the seasonally adjusted rise in Barfoot & Thompson's Auckland house sales was 3.3 percent over May.

The housing inventory was now back to levels last seen during mid-2009.

So far, the lift in activity appeared fairly localised to Auckland, with nationwide activity remaining subdued, she said.

Barfoot & Thompson data highlighted that housing supply in Auckland was becoming tight, particularly after a few years of low construction activity, and supported ASB's view of rising house prices during the coming year.

"The lift in Auckland housing market activity suggests that confidence in the household sector is gradually beginning to recover."

Goldman Sachs economist Philip Borkin said seasonally adjusted Auckland house sales by Barfoot & Thompson had risen 24 percent since the start of the year.

He estimated seasonally adjusted available listings had fallen for five consecutive months. At the current pace of sales it would take 6.5 months for properties listed to clear, down from 10 months late in 2010.

But with households still well entrenched in deleveraging mode and shying away from additional debt, with affordability still stretched, it was hard to see the market really taking off in the near term, Mr Borkin said.      

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