It’s no secret that the Auckland property market has had a sedated winter with both house sales and prices dropping slightly over the last six month period, but as spring hits and we inch closer towards summer it seems that the market is beginning to show some signs of life, weather this is from seasonal trends or announcements from the reserve bank and government, we have a closer look to see if the trend will continue to pick up.
The July Surprise
The Real Estate Institute of New Zealand has revealed that the number of homes sold in July were up compared to the same time last year. The REINZ recorded 6118 residential property sales in July, up 3.7% compared to July last year, this will be welcomed news for those in the industry after a sustained period of sluggish sales activity over the winter period. Sales were especially buoyant in Auckland with 1894 properties sold in July, up 6.6% compared to July last year.
REINZ chief executive Bindi Norwell is hopeful that this is a good sign going forward, “This is the first time in eight months that we’ve seen the number of properties sold around the country increase on an annual basis, suggesting that we’re starting to see some early signs of growth”. CoreLogic NZ also reported in its House Price Index that property values in NZ remained firm in July with the annual rate of change increasing slightly from 2.0% at the end of June to 2.2% at the end of July.
First-Time Buyers Taking Advantage of dipped prices and low Interest Rates
Significant price drops and the continuous slide in mortgage payments have benefitted the first-time buyer, with reports estimating that the mortgage payments on a lower quartile-priced home in Auckland have come down from $694.69 a week in July 2017 to $616.96 a week in July 2019, a saving of $77.73 a week. First time buyers have taken up a more sizable chunk of the market across winter, and if the interest rates stay as is or continue to fall, they may continue to play a big part in the summer sales.
Summer Predictions Positive
Those who are watching the market closely have predicted a strong summer ahead, citing falling interest rates and population growth as the leading causes in reviving the Auckland market. ASB economists have recently announced that they expect nationwide house price inflation to pick up from the current annual pace of around 1.5%, to 5-6% by mid next year.
In ASB’s new Home Economics publication, senior economist Mike Jones says while there are plenty of “cross-currents” at play in NZ’s housing market, it’s ASB economists’ view, that sharp falls in mortgage interest rates will combine with still-strong population and labour income growth to “jump-start the Auckland housing market and add a little more heat to simmering regional markets”.
Many will be watching the market closely as summer arrives in the next few months to see how the 2019 year will continue to shape.