Buyers in the Auckland property market have become more selective, but for the right property are prepared to meet the auction reserve or asking price.
In October, the rare situation developed where the average sales price set yet another record while sales numbers fell to their lowest in an October for five years, and available property for sale reached its highest number at month end in three years.
It is a combination of factors that hasn’t come together for many years.
The last time sales numbers fell this low in an October was in 2011, when the market was still not fully recovered from the 2007 Global Financial Crisis.
It is yet another sign the Auckland market is losing its forward momentum.
In October, high-end buyers were not put off by prices if the property represented value for money, and 39.2% of the homes sold were for in excess of $1 million.
This is the first time this year properties selling for more than $1 million have represented close to 40% of sales. Normally the number is in the mid-30s.
This high-end activity lifted the average sales price to $943,801, an increase of 2.6% on that for September, and 12.3% on that for October last year.
Sales numbers in the month fell to 778, more than a quarter lower than those in September and also a quarter lower than the average for the past three months.
Choice eases pressure
Where buyer resistance to prices has been felt most is in the under $1 million price category. Greater choice has created an environment where buyers feel less pressure to pay the asking price.
This is reflected in the median sales price for the month which increased by 1.8 percent in the month to $865,000. This compares with the average price increase for the month of 2.6%.
The average median price increase over the past 12 months now stands at 10.9%, compared with 17.4% for the 2015 calendar year and 11.1% for 2014.
The new LVRs that investors must meet has had a significant impact on sales in the under $500,000 price category. In spite of there being a reasonable selection of properties available, only 40 homes – or 5.1% of all properties – sold for under $500,000.
With the normal spring lift in sales activity failing to arrive this year, the relationship between buyers and sellers has moved into a more balanced position.
At month end, we had 3711 properties listed, 21.3% higher than at the end of September.
Peter Thompson is Managing Director of Barfoot & Thompson, Auckland’s leading real estate company, selling around one in three Auckland residential homes significantly ahead of all other competitor brands. For more information, visit www.barfoot.co.nz
Barfoot & Thompson was a Sponsor of the Sixth Annual Indian Newslink Sir Anand Satyanand Lecture held at Pullman Hotel on July 25, 2016.
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