We hear all about it in the media, NZ house prices particularly in Auckland are reaching record levels each month.

Why is it happening? We know it stems from an under supply and a consistent high demand of homes but what is causing this demand and shortage issue?
According to Shamubeel Eaqub, principal economist at the NZ Institute of Economic Research, Blame it on the Kiwi culture of home ownership and housing investment. Blame it on the tax system. Blame it on easy access to mortgage finance.
Why? Because regulation overly favours mortgages over other types of lending. Attractive tax advantages of real estate investment. The alternative of renting isn't as attractive compared to owning a home.

According to Corelogic, Thirty years ago, an average house cost two - three times the average household income. By 2007, an average house cost more than six times household income.
So who's buying? 45% goes to investors, about 8% of purchases are possibly being made by overseas cash buyers and the rest are purchases moving from one property to another.

Did you know? In 1991, 76% of homes in NZ were owner occupied, but by last year, that was down to 63%. Home ownership rates are now the lowest since 1951.
In the 1990s, a household on the average income needed 30 years to save a deposit and pay off a mortgage. In Auckland today, it is an estimated 50 years.

A few recommendations from Mr Eaqub to curb this can be viewed here: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11293868

We have seen some record asking prices in Auckland suggesting that it's still a sellers market, with new listings declining. There were a reported 8,524 new listings for sale on the website in June, 20% less than in May last year.

The latest figures show the average asking price for Auckland properties listed for sale in June hit an all time high of $732,240, ahead of the average asking price in May which you can see in the diagram below.

These Auckland sales figures have driven up the national average asking price up to $490,550.  Lack of supply and high demand is still the trend in the property market - "The high asking prices in Auckland in particular suggest that home sellers are confident they will get their price," Realestate.co.nz marketing manager Paul McKenzie said. "A factor in this may be the low overall supply of homes."

Interestingly, the number of sales below $400,000 fell by 17% compared to last year and those properties with an asking price in excess of $1 million rose 19% in the year. Sales between $600,000 and $999,999 rose 6.5% from last year to make up 20% of total sales. Houses in the $400,000 to $599,999 price range rose 2.3% compared to last year making up 28% of total sales.

The latest statistics have reported a 13.6% drop in in sales as we come into the winter season. Seasonally, this is quite common as people do (generally) prefer to list in the summer or spring months where you see the majority of activity.
The average sales price during May was $702,966 (down from $708,603 in April 2014) and that was down from $725,728 in March.

Auckland particularly has been very short of new listings and this appears to be continuing but again, quite common for this time of year.
The latest figures show that the 'speed limits' on high loan-to-value lending introduced by the Reserve Bank in October appear to be continuing to dampen sales volumes but in South Auckland, we have seen auctions continue to sell and while listings are tight, properties do continue to sell. The median price, which has jumped all over the place recently, rose to $645,000 from $619,550 in April 2014. It now sits slightly below the record $652,000 set in March.
The median is up 13.2% on a year ago, which further suggests that overall prices are not being hugely effected by the LVRs.
The LVR may also be lifted by this time next year which will increase the number of willing purchasers.

In South Auckland, primarily Papatoetoe, Goodwood Heights, Clover Park and Totara Heights, it is still firmly a sellers market. Quality homes in good locations are going out the door and therefore the auction method is the preference with the majority of real estate agents in these areas.

Well, that is the last blog post from me as I will be in Spain from 10th June to the 14th July. Keep warm and I look forward to updating you on the market upon my return!