However, the low number of new property listings and the total number of properties for sale in July has produced the tightest property market for choice in Auckland for four years, says Peter Thompson, managing director of Barfoot & Thompson.
“Overall we have a stable market which is waiting for greater certainty in terms of when the economy will start to pick up,” he says. “Normally the combination of buyers in the market and lack of choice would lead to prices increasing as buyers compete for available properties. Even though there are buyers out there, prices are increasing at only a nominal rate. Buyers are prepared to pay a fair market price, but not over the top.”
Across the wider Auckland area residential property values have increased 2.4 per cent since January, says Jonno Ingerson, QV research director. As a result they are now 1.9 per cent above last year and only 0.6 per cent below the previous market peak of 2007.
QV’s Glenda Whitehead says local influences are at play in the city. “Auckland is an extensive region and, while values sit at 1.9 per cent above a year ago, when you look at each area this reflects too little for some and too much for others. We continue to see strong demand based on locality and building type.
“There are definitely two distinct speeds prevalent across the region. It is a seller’s market in the leafy inner-city suburbs, while elsewhere we have greater balance between listing levels and number of buyers.”
The shortage of listings in Auckland is not yet transferring into prices with only a modest lift compared with last June and a 3.3 per cent lift compared with the year to July 2010, says Real Estate Institute spokesman Phillip Searle.
“Most of the lift in prices and volumes is occurring north of the [harbour] bridge, with markets in the southern part of the region fairing relatively less well.”
The turbulence in offshore financial markets may inject some caution, according to the BNZ/Real Estate Institute’s latest monthly market survey. But the simple fundamental of a growing under-supply of dwellings, made worse by construction at a four-decade low, and now renewed chances of interest rates holding low for longer, is expected to result in the market gaining strength.
“More buyers are out and about kicking the tyres,” the survey says, with a net 20 per cent of agents reporting more people going through open homes. More written contracts are going unconditional and auction clearance rates are improving.
For the first time since April, the number of agents reporting that more potential vendors are seeking appraisals of their properties has gone onto the positive side of the ledger.
The improving residential real estate market is being driven by first home buyers rather than investors.
For the second month in a row, agents are reporting that market prices are rising. However inadequate listings, either in quality or quantity, continue to hold buyers back.
But fewer and fewer buyers are holding back because they feel prices will decline, worries about selling their own properties have eased and perceptions of the difficulties involved in getting finance are about average, the survey’s authors say. “People are largely looking to buy a house because they are trading up or down, shifting towns, or their relationship has broken up.”
