Akld prices up again - as expert urges “crash”
More confirmation SuperCity prices continue to go up is in Barfoot & Thompson’s June data – and a former Reserve Bank chief economist is advocating “crashing” the market to halt the rise.
Tuesday, July 5th 2016, 11:36AM
by Miriam Bell
Barfoot & Thompson’s just released data has June’s average sales price at $908,343, as compared to $874,623 in May.
This was an increase of 3.9% on May, 4.2% on the average price over the previous three months and 9.9% year-on-year.
The increase follows very little change in the average prices of April and May.
At the same time, June’s median price was $839,500, as compared to $809,500 in May.
This was an increase of 3.7% on May, 3.8% on the average price over the previous three months and 6.1% year-on-year.
Barfoot & Thompson managing director Peter Thompson said prices had edged up slightly, but the number of sales (1168) and new listings (1170) were consistent with the same period last year.
“The moderate increases in the average sales and median prices are a measure of a very tight supply situation.
“At months end we had 2936 properties on our books, which is marginally lower (2.6%) than the previous month’s 3013.”
But the fact prices only went up moderately demonstrate that purchasers are maintaining a level head in terms of the value they see in the properties on offer, Thompson said.
“These are signs that vendors are similarly realistic, even in a constrained market.”
Thompson added that just under half of all the properties sold in June (446) sold for in excess of $1 million, while just 67 sold for less than $500,000.
The fact that so few houses in Auckland are selling for under $500,000, while prices continue to rise ever higher has been causing consternation for months.
Initiatives to boost supply are underway, but they will take some time to bear fruit – especially as the construction industry is already struggling with capacity pressure.
Yet, in recent days, former Reserve Bank chief economist Arthur Grimes has been calling for policy-makers to flood the Auckland market with 150,000 new houses.
This would cause a 40% collapse in house prices to bring the median price back down to round $500,000.
To achieve this, Grimes said swathes of Auckland’s rural land needs to be developed and high density intensification in desirable areas around the city has to take place.
Grimes’ proposal has not been greeted with widespread enthusiasm.
Prime Minister John Key told media the idea was crazy as home owners did not want their equity values to fall and it could also hurt banks.
He also said it was unrealistic given the ongoing struggle to boost construction activity from the level it is currently sitting at.
Property Institute chief executive Ashley Church agreed with Key.
He said Grimes’ proposal would destroy, rather than fix, the market.
“I think we all broadly agree on the need to do something to bring down house price inflation and tackle affordability, but this is just cloud-cuckoo stuff.
“By the time we emerged from the carnage there would be nothing left”.
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