It seems a holding pattern is settling over both the national and the Auckland housing market. After months of social frenzy about the results of overheated markets, a diverse collection of data in July indicates conditions might be changing.

Price rises continue and the increasingly limited supply in markets around the country is considered to be a key factor. Meanwhile, talk is many property buyers are holding back because of the sky-high prices, the Reserve Bank’s latest LVR rules and uncertainty over Auckland’s Unitary Plan.

There are reports of declining yields, a decline in the national average asking price and a mixed bag of average asking prices from markets around the country. Could this mean the market is starting to correct, realestate.co.nz asks.

Their July data shows the national average asking price fell by 1.3% to $569,971, which was the first drop in the national average in three months. Markets around the country delivered a range of average asking price results.

Up and down asking prices For example, Auckland’s average asking price was up 1.1% to $898,562 in July, despite a 10.39% year-on-year slow-down in demand. Average asking prices in the Waikato, Wellington and Marlborough were up, but they were down in Canterbury, Central Lakes/Otago and Northland.

Demand, which is measured by viewing sessions, however, increased by 14.48% nationwide compared with July 2015. Realestate.co.nz spokesperson Vanessa

It will be Interesting to see Whether this Slow-down is a Pattern through To the end of The year – Nigel Jeffries

Taylor says the significant variations in asking prices and demand painted an interesting picture. Still to be determined was whether the fall in the national average asking price was the start of a trend, she says. “There have been calls across the nation for measures to rein in house prices,” Taylor says. “But it may be that the market is actually self-correcting, albeit slightly, with buyers unwilling or unable to meet ever-increasing price rises.”

The decline in demand for Auckland property was first apparent in June’s data and this month’s data reinforces the possibility that the shine may have gone off the city’s market, Taylor says. Cooling market Strong indications of a cool down in Auckland’s housing market can also be found in Barfoot & Thompson’s latest data.

It shows Auckland’s average price in July was $867,681, a 4.5% fall on June. July’s average price was 2% below the average price ($885,522) for the last three months.

While Auckland’s median price remained the same in July as it was in June ($840,000), Barfoot & Thompson CEO Wendy Alexander says the July market definitely changed.

“The year-on-year increase in prices is still occurring, but at a much slower rate than we have seen in the past four years,” Taylor says. “The average price has increased by 5.3% over the past seven months compared with 2015’s full year average price increase of 14%. The median price increase over the past seven months has been 6% compared with 17.4% for 2015.”

Along with slower price growth, sales were also down. Barfoot & Thompson sold 1034 properties in July. This was down 11.5% on June and down 25.5% on the same month last year. ASB economist Kim Mundy says the data should be interpreted carefully as July 2015 was an extremely strong month for both new listings and sales. July is the third successive month in which total inventory levels in Auckland have risen, suggesting demand is not as strong as it has been previously, she says.

“We have been warning for some time now that price resistance will begin to impact on activity, and we could be seeing the start of this,” Mundy says. But listings remain low, population growth remains strong and interest rates are near or at historical lows, Mundy continues. “Auckland building activity is also some time from matching population growth. All of the above factors will keep a floor under Auckland house prices.” Easing pressure

Modest house price movement suggests a flattening market, according to Trade Me Property. Their July data shows the national average asking price was up to a new high of $591,100 in July – but the rise was a mere $250, meaning growth was static. Head of Trade Me Property Nigel Jeffries says the market looked to be easing, as it coasted along in July after its foot came off the gas in June. “The average asking price is up 10% on last July, and since March this year it has only risen by $18,000,” Jeffries says. “It will be interesting to see whether this slow-down is a pattern through to the end of the year.”

Auckland’s market followed a similar, but more pronounced, path in July. The average asking price for a SuperCity property hit a new high of $851,850, a rise of just 0.4% on June. “Overall, it’s still significant: it’s up 13% over the year, but it’s a far cry from the 20%-plus surge we saw this time last year.” Around the country, only five regions saw a month-on-month increase between June and July. The currently hot markets of Bay of Plenty and Waikato led the way with rises of $2,900 to $546,700, and $9,200 to $444,200 respectively.

While housing market pressure is easing, it is too early to label it a turning point, Jeffries says. “We’ve seen some fairly modest rises and month-on-month falls in average asking price in some regions, but we’re not convinced we’re heading down the other side of the asking price hill just yet. We’ll be watching the spring surge in listings with interest.”

Risky Business

The latest QV data indicates that reports of waning interest in the Auckland market may be premature.

It shows that Auckland’s average value increased by 5.2% over the past three months and by 16.0% year-on-year to hit $992,207. This is 81.6% above the 2007 market peak – although, once adjusted for inflation, the average Auckland value went up by 15.5% year-on-year, which left it 54.2% higher than in 2007.

QV’s Auckland valuer James Wilson says a severe shortage of listings and the resulting strengthened demand characterised the city’s market throughout July. It is still too early for evidence of the market impact of the Reserve Bank’s further strengthening of LVR restrictions in July, he says.

A growing fear of missing out is rife across the Auckland market and this is leading to risky buying behaviour, such as failure to complete adequate due diligence, Wilson warns.

It is not just Auckland’s values which continue to grow solidly. The average national value increased by 6.1% over the past three months and by 14.1% year-onyear to hit $602,434. This is 45.4% above the 2007 market peak – although, once adjusted for inflation, the average national value went up by 13.7% year-on-year, which left it 23.5% higher than in 2007.

QV national spokesperson Andrea Rush says values continue to rise rapidly in many parts of New Zealand buoyed by low interest rates, strong investor activity and high net migration. “However, there are reports the new LVR rules have already led to some offers being withdrawn by investors in parts of the country,” Rush says.

Supply Driver

Evidence that the market is more complex than it might first appear also came in REINZ’s July data. It reveals new median price records in markets around New Zealand.

Auckland, the Waikato/Bay of Plenty region, Northland and Manawatu/ Wanganui all turned in new record median prices. The national median price was up 1% on June and 8.6% year-on-year to hit $505,000.

Sales volumes, however, were down. Nationally, sales dropped 7% on June and 10% on July 2015. In Auckland they fell by 8% on June and by 20% on July 2015, and in the Waikato/Bay of Plenty region they were down by 6% on June and by 14% on July 2015.

One major factor in both the rising prices and the drop in sales is the shortage of properties for sale. The REINZ data shows inventory continues to fall rapidly nationwide, with a 33% decline in properties available for sale year-on-year and six regions seeing a 40% plus drop in properties for sale.

REINZ spokesperson Bryan Thomson says the ongoing price rises in many regions show that demand is still firm. But sales volumes remain below previous periods, as the continued shortage of supply impacts on buyers, who are struggling to find properties to buy.