Auckland's cheapest houses getting cheaper

AUCKLAND, NEW ZEALAND - MARCH 03: Real estate signs in Auckland's central suburbs on March 3, 2015 in Auckland, New Zealand. Recent figures show that the value of New Zealand's average home peaked at

The price of an entry-level house has dropped in Auckland for the third successive month, suggesting the city's property market has finally peaked, according to a new report.

Combined with a drop in interest rates, this is being heralded as good news for the city's beleaguered first home buyers, href="http://www.interest.co.nz/" target="_blank">interest.co.nz's Home Loan Affordability Report says.

In the overheated Auckland market the average lower quartile (the cheapest 25 per cent of housing in the region) selling price peaked at $616,500 in May.

It then declined in each of the following months, to $600,700 in August.

For all of New Zealand, the lower quartile price peaked at $308,500 in March and has since remained within a fairly narrow range, to end up at $299,125 in August.

The August lower quartile price was below its peak in 10 of the Real Estate Institute of New Zealand's (REINZ) 12 sales regions.

In Wellington it peaked at $327,700 in February and was down to $311,500 in August and in Canterbury/Westland it peaked at $354,900 in April and was $350,600 in August.

Overall the figures suggest the prices for more affordable properties have flattened or declined slightly in recent months.

But in Nelson and Marlborough, the lower quartile hit an all-time high of $308,800 in August, and in Hawkes Bay, August's lower quartile price of $224,900 was equal to a peak in February.

"It is it good news for first home buyers because the easing in prices has occurred at the same as recent falls in mortgage interest rates, which has had a substantial impact on the cost of buying a home at the lower quartile selling price, particularly in Auckland," the report says.

"The average two year fixed mortgage rate offered by the major banks has declined in each of the last three months and was 5.08% in August, the lowest it had been since ... 2002."

According to the Home loan Affordability Report, a combination of easing lower quartile prices and falling mortgage rates would reduce mortgage payments on a lower quartile priced home in Auckland from $821.83 a week in May to $759.04 a week in August, a saving of $62.79 a week "for a typical first home buying couple."

A typical first home buying couple is defined as being a couple aged between 25 and 29.

"The latest figures are consistent with recent reports suggesting that many residential investors have been selling their properties as near term prospects for further capital gains recede," the report says.

According to REINZ, sales volumes have increased in almost all areas of New Zealand in the three months from June to August this year, compared to the same time last year.

The biggest increase was seen in the Waikato, where the number of sales increased 96 per cent, followed by Coromandel at 91 per cent, Northland at 74 per cent and Bay of Plenty at 64 per cent.

REINZ chief executive Colleen Milne said Coromandel was opening up as another suburb of Auckland, with a two hour ferry ride to the city.