Auckland Property Market Soars

By | April 6, 2011

6 April, 2011

The Auckland housing market moved further ahead of the rest of the country in March, with real estate company Barfoot & Thompson reporting its sales in the city rose the highest monthly level in nearly four years.

The company recorded 1070 sales last month, up from 927 in March 2010, figures published today show.

Goldman Sachs economist Philip Borkin said it was becoming clearer the Auckland housing market was outperforming the rest of the country.

“While the recent reductions in mortgage rates will be supporting activity and sentiment, we believe the outperformance is more fundamental in nature,” Mr Borkin said.

With historically low levels of new building and net migration, while not at strong levels, likely to be more supportive of Auckland housing demand than other parts of the country, he suspected demographic pressures were slowly beginning to surface.

That was also shown by increases in average rents, which were at a new record high of $434 per week.

The Barfoot & Thompson sales figures for March were up 11 percent from February on a seasonally adjusted basis, and up 15 percent from a year earlier, to reach the highest seasonally adjusted monthly level since December 2009, Mr Borkin said.

It was the fifth consecutive monthly rise in sales turnover by the company and followed an 8.2 percent rise in February.

Given the housing market was a good leading indicator, and with the Auckland region an economic juggernaut, the rising sales may signal the start of an improvement in the consumer spending backdrop, Mr Borkin said.

“We think it is too early to make a call on this yet given that household behaviour remains one of caution and deleveraging, but we are watching closely.”

Barfoot & Thompson said its average selling price reached an all time high $581,190 in March, with buyers of properties above $500,000 appearing to have decided now was the right time to buy.

The average price was $59,000 higher than that in February and $36,000 higher than in March 2010.

Barfoot & Thompson managing director Peter Thompson said the sales activity confirmed the Auckland market was reacting differently to that in the rest of the country.

“The formation of the Auckland region into one city has brought home to people the dynamic growth projected for the region, and the looming shortage of dwellings to house a future population in excess of 2 million people,” Mr Thompson said.

Ad Feedback “Combined with buyers reaching the conclusion that values are at the bottom of the price cycle, the economy looking likely to rebound in the next 12 months and interest rates at historically low levels, and you have the perfect conditions for people to commit to buying.”

The $434 average weekly rent was the highest on record, and the $32 rise from February was the biggest one month rise on record.

Ref: stuff.co.nz – NZPA