Stock deficit buoys prices

Kaine Wilson, managing director. Photo / Duncan Brown.

Real estate firm Harcourts says provisional data from its July sales show average house prices rose 25 per cent to $832,013 during the past 12 months in Auckland and Northland.

The firm says continuing strong demand for property has offset the traditional winter slowdown, but says new listings dipped 6 per cent in July when compared to July 2014.

However, June saw the number of new listings placed with the firm up by 46.7 per cent when compared to June last year.

Harcourts is currently marketing 1443 properties.

The firm's CEO, Hayden Duncan, says the crucial issue remains a general lack of housing stock.

"It's no secret that high demand continues to push up prices in the region," he says.

"We have people reluctant to sell because they're worried about not being able to buy elsewhere in the region, or they're holding on to one property and buying another to make the most of healthy rental returns."

House prices

House price expectations have reached their highest level yet according to the ASB's quarterly survey of housing market sentiment.

A net 65 per cent of respondents expect house prices to rise over the next 12 months, up from 56 per cent in the previous quarter -- the survey's highest reading since it started in 1996.

The bank's chief economist, Nick Tuffley, says: "Stronger sentiment outside of Auckland is likely to be reflecting the easing of lending restrictions for the rest of New Zealand, as well as falling interest rates.

"Consistent with these price expectations, recent housing data points to a broadening beyond the recent Auckland-centric theme. The survey shows that sentiment remains marginally positive in the North Island for buying a home, but dropped off at the end of the quarter within Auckland."

Tuffley says respondents in Auckland are likely pre-empting tighter rules for overseas buyers and the new investor lending.

Construction to rise

A house-building boom the size of which has not been seen for 40 years is about to envelope Auckland, according to the latest Ministry of Business, Innovation and Employment's National Construction Pipeline report.

It says the value of building and construction in Auckland will reach a peak in 2018 of $16.3 billion, and residential building will make up almost 60 per cent of all building activity in the region by value in 2018.

Following the peak, the value of residential building is expected to fall to $16.5 billion.

You can expect to see more higher density housing too, as this style of property increases its share of residential construction over the coming years -- they will make up about a third of all new dwellings consented (increasing from a fifth in 2013).

More than 53,500 detached homes are forecast to be consented in Auckland from 2013 through to 2020, peaking at more than 8,200 in 2017 (although a consented home doesn't mean it will be immediately built).