‘I’m calling it’: Auckland house market has reached lowest point, agents say

Sunday, 18 August 2024

Several Auckland real estate agents say the housing market in the Super City has reached its lowest point in terms of activity and pricing, with one saying “the tides are finally turning”.

However, other industry insiders remain cautious.

The median Auckland house price climbed 2.7% to $1.05m in June compared to the previous month, and rose 4.8% year-on-year, figures from the Real Estate Institute of New Zealand (REINZ) show.

However, the number of properties sold in Auckland in June was down 33.3% since May and 35.1% year-on-year.

Meanwhile, property research firm CoreLogic’s latest Pain and Gain report showed 44% of Auckland apartment sales were for a loss in the second quarter of the year.

Harcourts North West’s Diego Traglia, who heads up a team of real estate agents and features on the reality TV show Rich Listers, said a surge of buyer activity over the past couple of weeks had led him to believe the market had finally turned a corner.

Traglia said multiple properties that had been languishing on the market for months had suddenly received multiple offers.

“I had a section in Laingholm, which had been on the market for about six months, dead in the water, and then all of a sudden we had two offers coming in with one offer being cash unconditional.”

Two five-bedroom, three-bathroom homes in Hobsonville, one with a CV of $1.44m, also received multiple offers within the past couple of weeks, he said.

“Both properties are at the high end, getting multiple offers in the same week. It showed me there is a level of activity that we’ve not seen for quite a while.”

The townhouse market has also picked up, he said.

“A two-bedroom townhouse in Glen Eden we had absolutely no offers for the first four weeks on the market, and then all of a sudden we had a three-way multi offer.”

Traglia said he had seen investors, as well as developers, return to the market in the hopes of picking up bargain properties.

“I got a message from an investor saying they want to buy 10 properties… These types of investors know that if they put $10m in properties then three years down the line they’re probably going to have $2 to 3m profit.”

In a recent email to clients, Traglia said “After months of uncertainty and stagnation, the real estate market has reached its lowest point. And now with the surge of activity observed over the past (fortnight), I’m calling it - prices are poised to commence the rise of the upcycle.”

Barfoot & Thompson director Stephen Barfoot is also optimistic about the Auckland housing market, saying that in July, traditionally the slowest month of the year for sales, the company sold 902 homes, 25% more than in the same month last year.

“In the last seven years, only in 2022 and 2021, when prices were on the rise, have we sold more homes in the depths of winter.

“Buyers were attracted by a combination of vendors being prepared to meet the market and anticipation that prices may be at their low point given recent movement in mortgage interest rates.”

While July’s median sale price of $970,000 was lower than the median for the three months prior, it was 2.1% higher than last July’s median, he said.

“Commentary around lower inflation numbers and the promise of further interest rate cuts led to an increase in confidence among buyers, and we saw the re-appearance of multi-offers across the network.”

Meanwhile, Ray White reported that buyers were “out in force” at auctions in the week beginning July 29.

The company said 126 properties were scheduled to go under the hammer that week, averaging 3.5 active bidders per auction.

“The hope of an OCR (official cash rate) change on the horizon and steady inventory levels has ushered in a period of remarkable activity and resilience for Ray White's auctions,” head auctioneer Sam Steele said.

CoreLogic chief property economist Kelvin Davidson said it is likely too early to say for sure whether or not the Auckland market has begun a true turnaround.

“We tend to see data on a monthly cycle, so picking up on what might have happened over the past few days is tricky. Certainly in June there was no evidence of that. Sales were still very, very soft and interest rates were still high with prices dropping further…. Things are still very subdued, but turnarounds always start somewhere. It’s not going to be like this forever.”

Davidson said an increase in buyer activity could be attributed to a seasonal upturn as sales are typically at their slowest over the winter.

“You do start to see in August that activity picks up, so you’ve got to keep that in mind as well. From what I see, there are still a lot of challenges in the housing market and I doubt that, in Auckland or elsewhere, it’s suddenly going to be off to the races again.”

Davidson does envisage the market improving in time, saying interest rates have already started to come down, but he said rising unemployment may temper things.

If vendors are starting to accept lower offers, Davidson said he could see more sales taking place but, at this stage, he hasn’t seen concrete evidence of that happening.

“In two months we might look back and say we can definitely see a rise in sales activity, but the starting point is still very low. Sales over the past couple of years have really been as low as they’ve been for 40 years so, even if there’s growth, we’re still not back to any type of normality.”

Trade Me Property customer director Gavin Lloyd was also sceptical, saying “it’s a very hard time to pick when it will be the lowest point in the market,” adding, as Davidson did, that the market tends to slow in winter.

“Auckland reached a 2024 high in March at $1.08m, but that’s dropped by almost $50,000 in the last few months to $1.03m in June,” he said.

“Buyer activity has also slowed, with properties taking longer to sell. The median days on the site for June is 73, which is about five days more than the previous month. In particular, Auckland is seeing the highest median days on the site since we first started recording this in 2020.”

Traglia, however, believes buyer have an excellent, but short, window of opportunity to secure a property before prices really rise again.

“At the moment, the gap between what vendors expect and buyers are willing to pay is small because vendors are going on the market with a pessimistic outlook. The buyers, because there is a bit more activity in the market, are a bit more motivated than they were a month ago. So the gap is small, but that will not last long.”