Healthy Sales & Listings in the New Year18/02/2020
Barfoot & Thompson is the biggest real estate agency in Auckland, with 678 properties sold in January a marked increase from 653 sold the year before. The average home price in Auckland was up 2.6% from 2019, with the biggest movement seen in the median property price, which was up 2.3% for the month and 6.9% for the year. While stock remains tight in some markets, and rising prices continue to make it hard for first-home buyers, a healthy Auckland housing market will lead to greater confidence throughout New Zealand.
The sharp increase in the median price was mostly due to an increase in home sales above $1 million. It wasn't just expensive homes in the inner-city that saw strong growth, however, with the agency's rural and lifestyle divisions also experiencing their best start to the year for three years. New listings were also up by 10.1% from the year before, with the agency receiving 1080 new listings in January. The sharp rise in new listings may be starting to ease long-term stock shortages across Auckland.
According to Barfoot & Thompson's managing director Peter Thompson, "It was an extremely confident start to the year... Buyers were active across all price segments and were prepared to pay near record prices. Growing numbers attended auctions and open homes during the month... The active markets led to a renewed interest in development land from those buyers unable to find an existing property that met their needs."
Rising prices are not good news for everyone, however, with first-home buyers continuing to struggle. According to a new report from the Helen Clark Foundation, action is needed now to promote higher rates of home ownership among the younger generations. Home ownership rates are now at their lowest levels in 60 years. From 2001 to 2013, ownership rates among 25 to 40-year-olds dropped from 46% to 35%, and today they may even be lower.
According to the report, rising house prices should be driven down by introducing a capital gains tax and increasing borrowing limits. While these measures are extremely unlikely to be introduced, there is little doubt that Auckland house prices are increasingly unsustainable for a growing demographic. The Prime Minister has ruled out a capital gains tax, with the Government instead attempting to solve the problem by building more new homes. However, with January results showing a rise in sales, listings, and prices, more than one approach may be needed to tackle this growing problem.