Record sales prices are being set each month and competition at auctions is fierce – but just how hot is Auckland’s housing market?
Exclusive data reveals that although many real estate agents are calling Auckland’s housing market “crazier” than the 2016-era boom years – price increases aren’t running quite as hot.
Between August and October this year, house prices jumped 2.8 per cent from $880,000 to $905,000, data by analysts OneRoof-Valocity showed.
Although impressive, it was still below the phenomenal price jumps in the same three-month periods in 2015 and 2016.
In 2015, house prices jumped 3.6 per cent from $695,000 in August that year to $720,000 by October.
Prices ran even faster in 2016, jumping 5.1 per cent from $790,000 in August that year to $830,000 by October.
And though this year’s booming Auckland housing market might not be as hot as 2016, many pundits are amazed prices rose at all given that most expected them to be hit by the economic fallout from Covid-19.
“I thought house prices would fall on average 5 to 10 per cent because we’ve got no experience of a global pandemic,” economist Tony Alexander told today’s OneRoof Property Report.
Instead, it was now impossible to “put a number” on just how high prices would climb to, he said.
The biggest driver of price increases was record low interest rates making it cheaper to borrow money for home loans, he said.
Other factors included a “fear of missing out” among buyers and the probability that many people were redirecting some of the money they would otherwise spend on overseas trips into housing.
ASB chief economist Nick Tuffley said many people were feeling more confident in their financial security as more extreme fears over job security had faded and the country had come through its initial Covid-19 lockdowns.
An under-supply of housing was also playing an important part in keeping prices high, he said.
And those powerful forces were having an even greater effect on national house prices than those in Auckland, according to the OneRoof-Valocity data.
Between August and October this year, national prices rose 2.3 per cent from $665,000 to $680,000 last month, the data showed.
That was ahead of the boom years when a 2.2 per cent jump in national prices occurred from August to October in 2015 and a 2 per cent jump during the same months in 2016.
Tuffley said the word “boom” was not out of place to describe the current market.
“We’re getting a bit of a boom, in the sense we’re getting people responding to interest rates in the way they normally do,” he said.
However, not everyone is willing to use the word boom.
Lesley Harris, from the First Home Buyers Club, said she wouldn’t call the current market that.
“I think there are some isolated, extraordinary sales but I’d want to see that repeated month after month after month before I said it’s a boom.”
Liz Kendall, senior economist for the ANZ, also cautioned that “headwinds” capable of dampening the skyrocketing market – such as lower migration and new economic challenges from Covid-19 – could yet emerge.
“I’m a bit surprised there isn’t just a bit more caution out there in terms of willingness to pay, given there is so much uncertainty from an economic perspective.”
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