Century 21 New Zealand national manager, Geoff Barnett has spoken out against suggestions of an imminent real estate crash in Auckland, saying it is “irresponsible” and “such a dramatic turn of events is unlikely”.
His comments follow the release of REINZ data this week, which revealed the median house price in Auckland has reached $805,000 – up from $749,000 12 months ago.
The national median house price (excluding Auckland) is at $385,000.
“Some commentators are now trying to compare the real estate market to the sharemarket excitement leading up to 1987. It’s completely different. Auckland house prices aren’t rising off the back of speculators having a bit of fun. They are continuing to rise largely because there’s a shortage of supply.
“Auckland is somewhat protected by unrelenting population growth. The region grew by 43,000 people last year and is forecast to grow by another 400,000 in the next 17 years – which will no doubt be surpassed. Let’s not forget every Statistics New Zealand growth forecast for Auckland has always been well beaten.”
Mr Barnett says another thing to consider is the fact that it’s not unusual in a global sense for a country’s dominant and only international city to have much more expensive residential real estate than other centres in that country.
“Auckland’s effectively playing catch-up. It’s housing stock was arguably undervalued for a number of years when you consider its New Zealand’s commercial capital and largest city by far.
“Younger people are having to buy further out, spend more time commuting, and more people are renting. But for better or worse, that’s no different to what other international cities have experienced for years. I’m not saying it’s ideal, but it’s certainly not unusual in a global sense.
The rises in Auckland’s median price are now below that of the national median price, according to the REINZ data and five regions have hit new record high median sale prices with Waikato/Bay of Plenty experiencing its fourth consecutive record median sale price of $419,000.
The other four regions include Taranaki ($343,250), Wellington ($465,000), Canterbury/Westland ($435,500) and Central Otago Lakes ($707,250).
Real Estate Institute of New Zealand (REINZ) spokesperson Bryan Thomson says, “As 2016 progresses we are seeing regional markets such as Waikato/Bay of Plenty, Central Otago Lakes, Northland and Hawke’s Bay strengthening in both prices and sales volume, while the large main centre markets of Auckland and Canterbury are taking a back seat.
“Southland and Manawatu/Wanganui have also seen noticeable increases in the median price, falls in the days to sell, drops in properties available for sale and rising sales volume since the start of 2016. The confidence led by Auckland is helping to drive demand in regional markets with lower interest rates, easier borrowing conditions outside of Auckland and generally good economic conditions are also contributing.”
“Of some concern is the dwindling level of properties available for sale and, with winter now upon us, the number of properties coming to market is also going through an expected seasonal decline.”