Auckland house prices hit high
By DAVID GADD - Stuff.co.nz Last updated 11:07 07/01/2010
Auckland house price have spiked to a two-year high as buyers were being told homes were more affordable.
Auckland house prices hit a two-year high in what realty firm Barfoot & Thompson says was an "exceptional" month of sales.
It comes as, nationally, housing continued to become more affordable in the three months to the end of November, according to Massey University.
The university today said its national affordability index improved by 2.6 percent to a reading of 25.7 in the quarter ending November 30, from 26.5 in the August quarter.
The index measures how affordable housing is by weighing house prices against mortgage rates and median wages, or 'servicing' costs.
The November quarter recorded a 0.3 percent increase in the average weekly wage, a 2.3 percent increase in the national median house price and a 4.5 percent reduction in the average weighted mortgage interest rate.
But Professor Bob Hargreaves, who compiles the report, said a more hawkish statement recently from the Reserve Bank made it increasingly unlikely the current low interest rate environment would be sustainable through 2010.
Auckland house sales in December averaged $552,933, the highest average monthly price in two years, according to Barfoot & Thompson.
"You have to go back to the height of the 2007 property boom to see comparable prices," said managing director Peter Thompson.
"Activity was exceptional for a December," he said.
His agency sold 648 properties, its highest number of sales in a December for two years, and 40.6 percent higher than in the same month in 2007.
Figures are not yet available for other Auckland firms or nationally. The Barfoot & Thompson figures are therefore only indicators of the market.
During the last quarter eight of 12 regions showed improvements in affordability, led by Taranaki with 14.8 percent, Central Otago Lakes 13.5 percent and Southland 11 percent.
Northland had the largest reduction in affordability, with a 15 percent change, and for the first time was one of the three least affordable regions with an index at 104.8 percent of the national average.
Least affordable was Central Otago Lakes on 135.9 percent, followed by Auckland at 124.9 percent, while Southland retains its place as the most affordable region with an index of 58.8 percent of the national average.
Prof Hargreaves said the national index had peaked at 33.86 in November 2007, around the time the real estate market peaked, and had been in a "pretty steady" decline since.
He expected affordability would worsen due to rising interest rates, while he did not expect house prices to fall and they could still rise further.
But last month house buyers were warned by Quotable Value to be cautious, with a "small bubble" in prices expected to ease.
And ASB Bank chief economist Nick Tuffley said while the housing market in the big cities had built up "a head of steam" as buyers competed, prices would lose momentum.
A rise in listings and house building would boost supply, while falling affordability and expected interest-rate rises next year would dampen demand, Tuffley said.
Nationally, the average sale price in November was $393,373, reflecting the mix of properties selling rather than value shifts.
Mr Thompson said: "Regardless of how you analyse the sales data, sellers are now achieving almost a similar price for property as they would have at the height of the 2007 property boom.
"Unlike 2007, however, buyers are committing on the basis of value for money and lifestyle decisions, rather than expectations of substantial capital gain," he said.
"Average monthly prices have now increased for the past three months, and the average monthly price for 2009 of $522,297 is 1.7 percent higher than that for 2008 and three percent down on that for 2007," he said.
"In reality, the prices of houses did not fall sharply from their 2007 highs because owners did not accept the lower prices on offer.
"What has yet to return to 2007 levels is the average number of monthly house sales, with 2009’s monthly average of 782 being down 14.5 percent on the average number of homes sold monthly in 2007."
Mr Thompson said he anticipated market prices would remain stable in the first quarter of 2010.
