4 Jan 2019

Modest rise in asking prices for homes

5:59 pm on 4 January 2019

The national average asking price for a home has had its smallest annual increase out of the past five years.

Aerial view of Auckland city, New Zealand

The housing market stabilised in 2018 compared with the extremes of previous years, according to realestate.co.nz. Photo: 123rf

Figures collated by realestate.co.nz show a 1.9 percent increase in the year to December 2018.

Spokesperson Vanessa Taylor says the modest increase reflects a smoothing out, compared with the rapid price rises of recent years.

For example, in 2016, the national average asking price gained almost 17 percent on the previous year, to $618,612.

In December 2017 the average asking price for a home was $660,798 on realestate.co.nz and a year later it sits at $673,043.

The Auckland region dominated movements due to its size.

Ms Taylor said the average asking price was not a valuation measure, but an indication of market sentiment.

She said the 1.9 percent increase for 2018 may be a correction rather than a trend, but last year the market did stabilise compared with the extremes of previous years.

"We've come off the back of a pretty frantic market of 2015, 2016 and 2017, and 2018 has 2018 has certainly been a market where we've stabilised.

"The reality is the New Zealand property market needed to cool down - it needed to stop and we've absolutely seen that throughout 2018."

Ms Taylor said one of the challenges for sellers and buyers at the height of rapidly escalating house prices in recent years was timing.

"Purchasing a house in a stable market reduces the pressure to make snap decisions," she said.

At the same time new listings were down 13.3 percent around the country compared to December 2017.

The figures show that while the Wellington and Otago regions led the drop, they were followed closely by four regions with falls greater than 20 percent. Bay of Plenty was down 21.5 percent, Gisborne down 50 percent), Nelson-Bays down 20.2 percent, and Southland down 20.9 percent.

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New house listings are down 13.3 percent around the country. Photo: 123rf

Ms Taylor said it would be nice to have a crystal ball to try and predict what this year will bring, but one thing she could safely say is that what was happening in Australia right now was not an indication New Zealand will follow.

"We are seeing this big boom and bust in Australia, and I often get asked if the same is going to happen in the New Zealand property market, but the thing we need to remember is that in New Zealand we do actually have a shortage of (housing) supply.

"In the big Australian cities - the likes of Melbourne and Sydney, they have an over-supply of homes and an over-supply of apartments which means they're having trouble moving them on."

Ms Taylor said in New Zealand there are still more people looking to buy homes than there are people willing to sell them.

"We will continue to see that trajectory upwards, albeit it might not be as steep as in the past two three years, but while there's still a lack of homes for sale, we are continuing to see the demand is outweighing the supply, which suggests we are not going to see a bust cycle any time soon."

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