Record median house prices in Auckland are being blamed for a so-called Halo Effect of rising costs across several regions of New Zealand. This is in accordance with reliable figures released by REINZ recently.
Median house prices all over Auckland have rebounded from a brief slowdown and are north of $800k for the first time. Additionally, demand continues to grow exponentially faster than the supply of new properties. As the record high continues to grow, some estimates put the median price much closer to $900,000. Auckland has clearly overcome changes to taxation and LVRs that were established at the end of 2015.
As a result, a significant number of buyers are priced out of the Auckland market and are considering moving into new cities, which then heat up under the increased demand. REINZ Chief Executive Colleen Milne believes that Aucklanders are responsible for the rising home costs in many other areas.
Milne says, “We have talked before about the Halo Effect, which is gaining in strength. Right across the country, regional markets have been strong, with a large number of record medians and the strongest sales for nine years for most regions, with the strongest March sales for 11 years in Waikato/Bay of Plenty and 14 years in Central Otago Lakes.”
Record median home prices have also been recorded in Canterbury/Westland, Wellington, and Nelson/Marlborough.
There has been anecdotal evidence of greatly increased demand from foreign investors in a number of regional markets, but the most recent figures from Land Information New Zealand estimate the percentage of home purchases nationwide by overseas investors to be at about 3-5%.
- A total of 9,527 dwellings were sold throughout New Zealand in March 2016, up 30.7% from this February.
- The national median price of $495,000 is up $20,000 (+4.2%) since March 2015, and a full 10.0% since the February of 2015. Excluding the Auckland region, the national median price would have risen $35,000 to $385,000 from March 2015.
- New record national median prices have been reached in many New Zealand communities.
- The number of sales valued over $1 million has risen from 1,023 to 1,301 in the twelve months between March 2015-2016, representing a 27% increase.
The surge in the demand for properties throughout New Zealand is also clear in the number of days it takes to sell. In March 2016, that figure was at the lowest recorded for Central Otago Lakes since 1994; most other regions haven’t hit their record lows in anywhere between the past nine to thirteen years. Auckland and Southland are the exceptions – they were the only ones who did not experience a significant shift in the number of days needed to sell in March 2016.
There has also been an increase in the number of homes sold at auction, up 4% from March of 2015. A total of 2,354 dwellings were sold by auction nationally in March 2016, which makes up 24.7% of all sales. Homes that were sold by auction in Auckland for March 2016 total 63% of the national numbers, which is actually a noteworthy drop from the reported 78% of national auction sales in March 2015.
Given these overall numbers, it remains to be seen how far the Halo Effect will radiate.