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Prices hold up reasonably well

Prices hold up reasonably well

Despite sales at Auckland’s biggest residential real estate agency dipping to a 14-year low, selling prices have not hit the same trajectory, writes Sally Lindsay.

By: Sally Lindsay

1 July 2024

The latest figures from Barfoot & Thompson show the median selling price in June was $1,020,000, up from $1,011,900 in May and $1,007,500 in April, but down from $1,050,000 in March.

Although median prices have remained fairly steady, last month’s was still $220,000 below the record high of $1,240,000 when the market was booming in November 2021.

On the other hand, the average selling price last month was $1,236,336, the highest it has been since December 2021.

“A feature of June's trading was the strength of sales in the top price segments, with 61 or nine per cent of sales being above $2 million, with 19 of those sales being above $3 million,” says Barfoot & Thompson director Stephen Barfoot.

Slump in sales

Sales have been a different story. The agency sold just 681 properties in June, down 26 per cent from the 916 sold in May. This is the lowest number of sales for Barfoot & Thompson in a June month since 2010.

Although new listings dropped to 1,506 last month, down from 1,695 in May, it was still the highest number to come onto its books since June 2020.

Total stock for sale at the end of June was 5,736 properties, up 34 per cent compared to the same time last year and also the highest for a June month since 2010.

Consents find a floor

Meanwhile, residential consents for new builds nudged down again in May, but Westpac senior economist Satish Ranchhod says they seem to be finding a floor.

The number of consents fell another two per cent, with just over 2,800 new dwellings approved.

The fall follows the sharp downturn over the past year, with consents issued in the past 12 months 23 per cent lower than in the previous year.

Ranchhod says as highlighted previously it’s a result of tougher conditions in New Zealand’s building sector. That includes large increases in build and financing costs over the past few years as well as continued softness in the housing market which is weighing on the prices for newly built homes.

Business survey

That picture of softening forward orders, continued cost rises and pressure on margins was reflected in the latest Survey of Business Opinion from the NZIER. A net 35 per cent of firms were negative on the outlook for the economy in the June quarter, compared with a net 25 per cent in March. While this is a weak reading, it’s still higher than it was last year.

Consistent with those trends we expect to see residential building activity continuing to trend down over the coming year.

Looking across regions, weakness has been widespread. Consent numbers in Auckland are down 26 per cent, Wellington is down 36 per cent and Canterbury is down 15 per cent. 

Encouragingly, the downturn in consents issued looks like it’s finding a base. Consents for standalone houses, around 40 per cent of the total, have held at about current levels for more than six months.

The downtrend in the multi-unit space (including townhouses and other medium density developments) has also flattened off.

However, with interest rates set to remain at contractionary levels for some time yet, any recovery in the housing market or building consents is a long way off, Ranchhod says.