Leap in $1 million-plus property sales

Real Estate Institute chief Helen O'Sullivan said $1 million-plus places were seeing the biggest gains compared with cheaper properties. Photo / Thinkstock

Top end driving price growth, but LVR restrictions keeping bottom of market subdued

Owners of top-end homes are getting richer the fastest, with strongest price growth in the $1 million-plus category, while people who own lower-priced places are not reaping the same rewards, data shows.

Real Estate Institute chief Helen O'Sullivan said $1 million-plus places were seeing the biggest gains compared with cheaper properties.

"Closer investigation of November's data shows that dwellings being sold for more than $1 million are seeing the strongest increase in price growth [plus 10 per cent], along with an increasing share of sales, while those at the other end of the scale are seeing much lower price growth [under 4 per cent] and flat to declining sales volumes."

More $1 million-plus sales are being recorded, up from 7.8 per cent of all sales last November to 9.3 per cent last month.

"The top end of the market is driving the overall rise in the national and some regional median prices, while those dwellings in the lower deciles are seeing less price growth and a lack of buyer capacity which may be related to the LVR [loan-to-value ratio] restrictions currently in place."

Barfoot & Thompson house-sale data for Auckland also showed the $1 million-plus residential market booming.

That agency made 91 unconditional $1 million-plus sales in January, accounting for 21 per cent of sales for that month by value, but by February that had jumped to 122 sales (30.7 per cent), March 253 sales (35.2), April 120 (29.4), May 188 (32.7), June 179 (35.9), July 169 (32.1), August 149 (28.2), September 164 (32.1), October 169 (33.5) and November 225 (34.9).

"We sold 225 homes for in excess of $1 million, the second time ever we have sold more than 200 homes in this price category in a month, and sales of $1 million-plus homes are running a third higher this year than last year," the agency said in releasing its November figures last week.

Barfoot managing director Peter Thompson said $1 million-plus places were rising faster than other price slots for many different reasons including buyers' ability to borrow and thus pay more, their desire to move into a higher price category and lack of choice, therefore stronger bidding, because of fewer listings in the more expensive brackets.

"The lower price brackets are more dictated by incomes and what they can get for a mortgage," Mr Thompson said, which could therefore suppress competition and prices. And he expects the expensive price rises to continue.