Home prices in Auckland are definitely still climbing. As reported by the area’s largest real estate agency, Barfoot & Thompson, the average home price in April 2016 was $873,599, representing an increase of 0.8% from the previous month of March, and an 8.6% jump from March of 2015.
However, Barfoot & Thompson reported that the sales volume was down in April. The agency reported that the number of homes it sold in April represented the lowest sales total in that month for the past four years. Sales in April 2016 dropped to 944 properties, a decrease of 29.6% from just the month before, and 11.8% less than April 2015.
Agency reps speculated that the most likely causes were the inability of many buyers to meet the current pricing, coupled with restricted choices due to significantly fewer properties available on the market.
What homes that are available in Auckland are priced extremely high. The number of homes that can be described as affordable, i.e., those worth $500,000 or less, make up only 7.1% of all homes sold under the figures above.
But even as the available choices across all price segments were low, Barfoot & Thompson reported that interest in top-end homes continues to build. Out of the total properties sold in March, 355 of them, or 37.6%, sold for more than $1 million.
Not just in Auckland, but even the capital city of Wellington is experiencing a hot housing market. There, too, is the demand for properties building while fewer homes are actually on the market. In April, Wellington’s average asking price for a residential property was $506,532, according to realestate.co.nz. That figure is approximately 2% higher than in the previous month of March.
For the moment, demand for properties is not waning. Brendon Skipper, Chief Executive of realestate.co.nz, says "With the lower level of stock on the market and buyers still out there, it's certainly a sellers' market."
Potential sellers may certainly benefit by choosing to sell their homes now, before the inevitable but unpredictable market crash. However, this strategy likely only works for people who intend to downsize or are free to move to a relatively affordable city such as Napier or Whangarei.
For property owners intending to remain in Auckland or Wellington, it may be a safer bet to stay put in their current homes and invest some money into property upgrades. With affluent residents moving in all up and down the block, it will be important for long-time residents to keep pace with the expected home quality and amenities across the neighborhood. In this way, when it eventually comes to sell, long-time owners won’t be forced to take a lowball offer from a property developer or at an auction.