Housing confidence at record high as Auckland sales continue to rise

It seems Christmas has come early for those looking to buy and sell as buyer confidence has returned to the market at a record high, just as Barfoot and Thomson report higher sales figures for the month of November.

Here’s what you need to know:

Housing Confidence at Seven Year High

According to a survey conducted by ASB, it seems that confidence in the housing market is returning across the board, with many thinking that it is a good time to buy. ASB's Housing Confidence Survey for the September quarter which surveyed over 2864 respondents, 27% said it was a good time to buy compared to 22% in the second quarter of this year, 13% said it was a bad time (down from 14%), 49% said it was neither good nor bad (barely changed from 50%), and 10% didn't know.

That was a seven year high in terms of the percentage of people who thought it was a good time to buy, so what is the biggest factor for this renewed confidence?

As many would expect it is the record low mortgage interest rates that hit across the latter half of the year that appear to be a major factor in those confidence levels, with 43% of respondents expecting lower interest rates over the coming year compared with 31% in the second quarter. ASB's chief economist Nick Tuffley isn’t surprised by this reaction to the market, as wage growth and low mortgage rates have constantly had the biggest influence on the market so far, "Over the past three months auction clearance rates have lifted, housing activity has picked up and houses are starting to sell faster.”

But Tuffley was quick to point out that the lift in housing confidence did not mean a return to boom times, "Even though mortgage rates are clearly the lowest they've ever been, there are some good reasons not to expect a return of the price surges we used to see whenever interest rates dropped”. Although wage growth and low mortgage rates are having their desired affects, other factors such as government policies are holding back core groups in bigger centers, "First, housing policies targeting investor demand are acting as handbrakes on those parts of the market that previously featured a large investor component, like Auckland and Queenstown.”

It’ll be interesting to see if the low mortgage rates continue to have a positive effect on the market.

Auckland House Sales Break Records

Auckland's largest real estate agency, Barfoot & Thompson, sold 960 residential properties in November, up from 824 in October and the highest number for the month of November since 2015 when it sold 954. Prices were also firmer, with the average selling price for the month hitting $963,671, which has only been exceeded once before, in March 2017 when it hit $968,570.

These record-breaking numbers are a welcomed sign as we head towards the end of a shaky year of sales, and with listings down 11% from the previous year. Many are hoping that the market could see a huge uptick in listings early next year, when potential vendors who may have been holding off listing their property while they waited to see how the market shapes out before they decide to commit to a sale over the summer season.

- Ravi Mehta, from Professional Finance Solutions