17 June 2015

Aucklanders trying to get into the housing market with less than $500,000 to spend are being closed out.

For the first time, Trade Me Property’s Price Index's analysis of new listings for sale over the past three months shows there are no longer any property types or sizes with an average asking price of less than $500,000.

Trade Me Property head Nigel Jeffries says there are no signs of the Auckland property market slowing down.

“Buyers have recently been looking at apartments and units as a way of getting on the property ladder, but anyone hoping to find a property investment under $500,000 is going to find it increasingly difficult.”

Mr Jeffries says attempts to dampen the housing market are yet to have an effect. “Auckland’s average asking prices have ticked up $6850 since April. Asking prices are now just shy of three quarters of a million at $747,450 – climbing more than $100,000 in the past 12 months.”

He says the average asking price for a one- or two-bedroom home in Auckland is now higher than the average asking price for all homes across the country. “At $565,600, the asking prices for these smaller homes are up 17.3% over the past year and have hit a new record high.”

While Auckland is setting new prices, the national average asking price fell month-on-month by 0.8% to $535,250.

Over the past year, apartments, the “oft-maligned cousin” of the Auckland housing market, have risen by $114,050 to a record high of $504,500. Five years ago the average asking price for an Auckland apartment was $316,000.

Units have seen a similar appreciation in price expectation and average asking prices edged past $500,000 in May. Five years ago the asking price was $318,000. Last month that had reached $509,250, up 60%.

Meanwhile, NZ Mortgages and Securities director James Kellow says if he were a first home owner he would be rushing out and borrowing as interest rates below 5% across the board are inevitable.

Many banks have dropped their interest rates since last week’s cut in the official cash rate to 3.5%.

“There will probably be another cut to the wholesale rates in the coming months, which will mean interest rates below 5% for many homeowners. What points to a drop is the Reserve Bank’s increasing concern about the impact of falling export commodity prices, which have been more pronounced than expected.”

Dairy prices fell 1.3% overnight, to the lowest level since 2009.

Mr Kellow says with the LVR and tax changes targeting investors from October 1, and a possible drop in foreigners buying New Zealand property, summer could be a good time to buy.

“For homeowners, locking in a cheaper mortgage interest rate is often better on the back-pocket longer term than trying to negotiate a slightly lower house price.”