Lower prices driving Auckland sales

New data from Barfoot & Thompson’s shows that July saw prices falling and sales numbers rising.

Both average and median prices were down in July, as compared to June as well as to the average for the previous three months.

The average price fell by 2.2% to $919,648 from June, while the median price decreased by 5.3% to $800,500.

Barfoot & Thompson managing director Peter Thompson says this was enough to unlock sales numbers, with July sales being their highest in the month of July for three years.

“The fall in prices has contributed to a greater number of sales conditional on buyers selling their own property going ahead.

“In July it resulted in sales numbers at 879 being 11.8% ahead of those in June, 16% ahead of the average for the previous three months and 5.9% ahead of those for July last year.”

For Thompson, the rise in sales is a positive sign that the Auckland market is getting through the traditional winter downturn in better shape than in the previous two years.

Another positive sign is an increase in new listings. July saw 1,154 new listings which was a 14% increase on June and a 9.2% increase on July last year.

An interesting feature of July’s sales was a higher number of sales of property at the lower end of the price spectrum.

Thompson says the under $500,000 price category accounted for 15.9% of sales in July which is significantly higher than they normally see.

At the same time, sales of properties in the $1 million plus and $2 million plus category combined made up 28% of all sales in July. They usually make up a third of all sales.

“It points to the higher number of apartment and terrace housing sales showing in the monthly statistics and the growing acceptance in Auckland of this form of housing.

“It can be anticipated that this growing sector of the market will continue to impact on the average and median sales prices being achieved.”

Barfoot & Thompson’s data suggests that buyers are re-entering the Auckland market and some commentators believe that ongoing low interest rates will give it a boost, in tandem with the national market.

Westpac chief economist Dominick Stephens says that since 2000 there have been four episodes of sudden decline in fixed mortgage rates and every one has been followed shortly afterwards by a lift in the rate of house price inflation.

“This pattern has been followed even in the most unlikely of circumstances, such as in 2010 shortly after the GFC. We forecast that annual house price inflation [nationally] will accelerate from 2% now to 7% next year.”