According to OneRoof data, property sales in the city is fetching 30% more than their actual CV.
The Real Estate Institute of New Zealand (REINZ) data shows, Auckland once again bolstered New Zealand’s median strength, striking a record median house price in July, climbing 28.0 percent from $918,000 in July 2020 to $1,175,000 in July 2021.
Jen Baird, Chief Executive at REINZ says: “July saw an easing in the number of properties sold across New Zealand, with an 11.7% decrease compared to July 2020 – although still showing strong numbers for a winter month with the number of properties sold in July 2021 higher than in 2019, 2018 and 2017”.
Baird continues, stating “With a 5.3% decrease in the number of sales from June 2021, we may be starting to see purchasers being impacted by the return of LVRs and talk of interest rates looking to rise. We need a few more months of data before we can see the impact of these changes and whether or not they are a long-term trend,”
First home buyers have been active in the Auckland market; however, the number of houses sold under $750,000 continues to fall, with only 14.9 percent sold in July compared to 28.5 percent at the same time last year. Access to finance remains a challenge, particularly for first-time purchasers, as houses are selling quickly, and approvals not being up to pace.
Economists predict that the Official Cash Rate (OCR) will continue to increase and keep climbing. And when the OCR grows, so are mortgage interest rates.
This week, the Reserve Bank is set to boost the OCR to 0.25 percent for the first time since 2014, when Auckland’s median home value was $637,250 and many current homeowners had yet to enter the market. Whether or not Reserve Bank Governor Adrian Orr raises the OCR by 25 basis points, 50 basis points, or even 75 basis points, most bank analysts predict the OCR will be above 1% by the end of the year.
OneRoof columnist Tony Alexander states that this would be a huge shock for 80% or more mortgage-holders who have never experienced anything other than low or falling interest rates.
House prices have persisted to rise across the country, with every region experiencing a year-on-year increase beginning in July 2020. The last two months have revealed early signs that the rate of growth is beginning to slow; however, it is too early to tell whether this is the customary winter softening or if the Government’s intervention in the market and signalling modifications to the OCR are beginning to make impact.
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