Signs of improvement in Auckland housing market

Thursday 3rd March 2011

Latest house sales figures from real estate company Barfoot & Thompson point to some signs of improvement in the Auckland housing market, although economists suggest the news may be less hopeful for the rest of the country.

The number of sales by the Auckland company rose 9.9% in February from January to 619, with the average price rising 1.2% to $521,887.

Barfoot & Thompson managing director Peter Thompson said the number of homes sold last month was on a par with the sales levels at this time of year for the past four years. The average price was the highest for a February month although similar to a year earlier.

Despite concerns about a rental crisis in Auckland, the average weekly rent in February was down $14 to $402 from January's all time high.

That fall was anticipated as the normal influx of people into the city during January eased, Thompson said.

"Even so, February's average price is $12 above the average rent for this time last year, and the market has certainly settled at a new benchmark."

ASB economist Chris Tennent-Brown said the Auckland housing data was showing encouraging sings in February, after several very weak months of activity.

The Auckland property market - supported by population growth and low construction in recent years - appeared tighter than other parts of the country.

While ASB expected nationwide prices to stay down around 5-6% from the 2007 peak, and only recover gradually in the years ahead, the dynamics of the Auckland market would likely lead to price lifts that were stronger than the nationwide experience, Tennent-Brown said.

There was now 8.6 months of inventory on the market, an improvement on the 10.3 months recorded last October, when the Auckland market appeared at its weakest.

Goldman Sachs economist Philip Borkin said the Auckland housing market appeared to be modestly outperforming the rest of the country.

"We suspect demographic demand is slowly beginning to support activity, although we note that house prices remain under downward pressure," he said.

At the margin potential emigration out of the Canterbury region could support Auckland housing.

NZPA

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