The health of the NZ residential property market continues to see a divide between Auckland and the rest of the country.
House price data by the Real Estate Institute for July showed a month-on-month fall of 1.7% nationally, which is not unexpected given the mid-winter property market lull. On a full-year basis, prices nationally have risen by a healthy 4.5%.
It has, however, been a different story in Auckland – there the month-on-month house price drop was 2.4% to July, with prices flat on the same period last year. Increasing levels of unaffordability are just one of the reasons cited for the stagnant market.
The stalling market in Auckland is not dissimilar to what’s been seen in the Australian housing markets of Sydney and Melbourne since 2017. However, the Australian market has recently shown some signs of green shoots, with prices reportedly hitting a bottom in recent months and the top end of the Sydney and Melbourne markets leading the burgeoning recovery.
As we all know, movements in the Australian property market are often a precursor for the NZ market, so many Auckland residents and investors will be interested to understand what lies behind the rebound.
A factor which is thought to have had an impact on affordability is the loosening of lending standards by the Australian Prudential Regulation Authority – making home-buying more affordable, particularly at the upper end. In NZ, one development that has improved affordability is the cutting of the OCR to 1% by the Reserve Bank in August, which should help to maintain mortgage rates at historic lows. In addition, CoreLogic points out that there’s still a shortage of property in Auckland which could help to keep prices stable in the short-medium term.
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