Auckland median house price up 21% in August year: REINZ
The number of home sales fell 4.4% in August from July, while soaring on an annual basis, as the national median price steadied on a monthly reading, according to the latest figures from the Real Estate Institute of New Zealand. Auckland's median price increased 0.7% in August to $740,000, and has surged 21% in the year.
Some 7766 homes sold in August, fewer than a month earlier but 43% more than in the same month last year, REINZ said. That includes the highest number of sales for Auckland and Waikato/Bay of Plenty since August 2003.
Today's REINZ figures show the national median price was steady last month at $465,000 compared to July, while showing an annual gain of 11%. Excluding the impact of Auckland, the national median housing price fell 1% to $348,500 in August, but was up 2.5% on an annual reading.
Demand for housing in Auckland is now overflowing into other regions, as investors wait for LVR restrictions to come into effect from November 1, Real Estate institute chief executive Colleen Milne said.
Aucklanders buy in regions
"The presence of Auckland buyers in other regions is also becoming more noticeable, with a surge in Auckland investors buying in Dunedin and continued strong demand for properties in the Waikato and Bay of Plenty from Auckland buyers," Milne said. "REINZ members report the pending Reserve Bank LVR restrictions in Auckland are driving some of this demand, as are low (and falling) interest rates. While there may be some stability coming into prices in the Auckland market, there is no shortage of demand from either first home buyers or investors across the region."
Two regions increased sales volumes, compared to July. Otago volumes rose 24%, while Manawatu/Wanganui increased 10%. On an annual reading, all regions lifted sales volumes, with Northland surging 97%, while Waikato/Bay of Plenty increased 77%.
The median price in Waikato/Bay of Plenty fell 1.2% to $353,000 in the month, but was up 6.5% on an annual reading.
Wellington's median price rose 1.7% to $402,550 in August, and was up 1.3% on the year. Sales volumes in the capital declined 3.6% in the month, but were up 29% on the year. Canterbury/Westland recorded a monthly 0.7% drop in its median price to $412,000, for a 3% annual gain. Sales volume slipped 6.3% in August but was up 16.3% compared to a year earlier.
Just 41% of properties sold in August were below $400,000, compared to 46% a year earlier, while the $1 million-plus bracket accounted for 11% of turnover, up from 6.7% in August 2014.
The proportion of houses sold at auction increased to 25%, up from 23% a month earlier, and 17% in 2014. In Auckland 77% of houses were sold at auction, compared with 14% in Waikato/Bay of Plenty, or 1.6% sold in Wellington.
The Auckland property market has been a persistent concern for policymakers as record inbound migration swells the population in the country's biggest city. A lack of building activity in the city, after the collapse of the finance company loans sector last decade, left a shortfall in housing supply when buyers re-emerged after the global financial crisis and local recession. That has pushed up prices to high levels relative to household incomes, something the Reserve Bank sees as a risk to the wider financial system in the event of a sharp downturn.
With average Auckland house prices costing approximately nine times' average earnings, Auckland is now one of the "dozen most expensive cities in the world," Reserve Bank governor Graeme Wheeler said in a press conference after this morning's release of the bank's latest monetary policy statement.
To soothe the property market, the central bank imposed restrictions on high loan-to-value ratio mortgage lending in late 2013. Further limitations on lending to Auckland property investors will bite from November, with banks facing pressure from the Reserve Bank to implement the restrictions informally and early.
"The cut in the official cash rate by the Reserve Bank this week by a further quarter per cent is good news for borrowers, although there has been minimal increase in house prices outside of Auckland despite the recent cuts in interest rates," said Ms Milne. "The impact of interest rate reductions within Auckland is hard to measure given the overriding supply and demand factors across the city."
Mr Wheeler cut the OCR for a third time this year this morning, lowering it 25 basis points to 2.75%, while noting the surge in Auckland's housing market.
House prices in Auckland "continue to increase rapidly and are becoming more unsustainable," Mr Wheeler said today. It "will take some time" before a rise in residential construction in the country's biggest city is able to correct the imbalance, he said.