Auckland house sales, prices continue to rise in May

Thursday 4th June 2015

Auckland house sales and prices continued to rise in May as the property market in the country's biggest city soaked up an increased number of new listings, according to real estate agency Barfoot & Thompson.

The number of house sales rose to 1,225 in May from 1,070 in April, and was up 11 percent form the same month a year earlier, Barfoot said in a statement. The average sale price rose 2.2 percent to a new record $822,148 in the month, and was up 17 percent from May 2014. The median sale price was more muted, falling 0.5 percent to $750,000 in May, though was still 16.3 percent higher than a year earlier.

New listings climbed to 1,740 in May from 1,580 in April, and were almost a third higher than the same month a year, though the sales activity meant Barfoot's available stock at the end of month was 3,060, down from 3,151 a month earlier, and 3,498 in May 2014.

"Buyers are mindful that prices are at an all time high, but the combination of a sound economy, low mortgage rates and a housing shortage gives them confidence prices are not on the verge of retreating," managing director Peter Thompson said. "In the past decade, only in 2013 have we been able to offer such limited choice as we entered winter."

Auckland's property market has been a bugbear for the Reserve Bank, which has been trying to contend with a strong currency sapping imported inflation and creating a case for lower interest rates, by limiting the regulator's ability to loosen monetary policy for fear of further inflaming housing demand in the country's biggest city.

To try and quell the market, governor Graeme Wheeler announced plans to impose restrictions on highly leveraged residential property investment borrowing in the Auckland Council's regional boundaries from October, which the bank expects will cut Auckland house sales by 8 percent in the first year, and reduce price growth by between 2 percent and 4 percent in the same period.

The government also announced efforts to reduce some of the incentives for investment in residential property imposing a two year bright line test for house buyers where the tax department would chase capital gains more ardently, and requiring foreign buyers to hold a New Zealand bank account and Inland Revenue Department number.

Barfoot's Thompson said the budget initiatives didn't affect activity in May, and if they are to have any influence, they would show up in the June figures.

BusinessDesk.co.nz

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