We continue our Auckland real estate series with experts saying it remains a good time to sell.
A cooling property market is the "new normal" - and it is not likely to be significantly affected by policies of the new Labour-led government, according to a senior real estate industry executive.
Chris Kennedy, Auckland-based CEO of Harcourts, says company research shows house prices dropped an average of 1 per cent throughout the country in October - the second month in a row this has occurred.
It comes as Real Estate Institute (REINZ) figures for October show median prices across all companies in Auckland fell by 3.2 per cent year on year to $850,000 – the biggest fall since December 2010.
"I think what we are seeing is the new normal," Kennedy says. "It perhaps means we won't experience the frenetic increases of the last two or three years."
Kennedy also believes it is unlikely new government measures will make much difference to the market.
"These will play out in time and we will have to live within the rules and boundaries the government sets," Kennedy says. "But factors influencing the market now like loan-to-value restrictions and tighter bank lending criteria all played their part before the election and will continue to do so."
Meanwhile the company's Auckland market data released last week show it has experienced a slight drop in the number of new listings in the last 12 months - falling 1.21 per cent from 742 in October 2016 to 733 this October - and a sharp decline in total sales (falling from 499 in 2016 to 412 this year, a reduction of 17.4 per cent).
The total of all Harcourts listings in the city (including new) is up however, jumping from 1534 a year ago to 1743 now.
Despite the recent slowdown Kennedy says Harcourts listings show Auckland house prices are still up on this time last year with the average hitting $963,359 in October, a 4.73 per cent increase on the average of $919,835 recorded in October last year – a figure well above the industry-wide median.
He says the fact the average price is up when listings and sales have slowed indicates there are still plenty of buyers in the market.
"I think this reflects a later start to the usual spring wake-up," he says. "The market (in Auckland) is clearly fluctuating as buyers and sellers process developments like the election result and if you are even remotely thinking about buying, this is the time to do so.
"It is also a good time to sell because clearly we are not seeing a huge fall in prices," he says. "But listings have been tight for some time so maybe the market is finding its new level."
Kennedy says factors like business confidence, interest rates and the housing shortage can have as much impact on the market as government policies.
He says its intention to place a ban on foreigners from buying existing homes, for example, may not have the effect it hopes: "It doesn't make sense because overseas investors may still buy land to develop, so on the one hand they're banning it and on the other they're allowing it."
Kennedy also has doubts about the KiwiBuild programme in which the government is planning to build 100,000 affordable new homes (the price range is expected to be between $500,000 and $600,000) within a decade. Half of these - 50,000 - will be built in Auckland.
"But Auckland is so short of houses it needs 17,000 every year for the next 10 years to meet demand," he says. "I'm not sure we've had permits for even 10,000 new homes in the last 10 years, so I don't know how they're going to do it."
Kennedy says the shortage is not going to be easily fixed because Auckland will continue to attract new people.
"We hear all the time about people leaving Auckland to afford cheaper housing, but we never hear much about the other side of the coin.
"Auckland is New Zealand's city of opportunity – it's where the jobs are and where people have better opportunities for income, so migration to the city will continue," he says. "For every person who leaves, three or four more arrive.
Kennedy says the government's plan to cut immigration - it has said it will reduce numbers by around 20,000 to 30,000 - may also have limited impact because there is considerable internal migration to Auckland from other parts of the country as well.
"A lot of New Zealanders transfer in to Auckland," he says. "I myself am an example. Until three years ago I lived in Christchurch, but I moved to Auckland and bought a house; it's definitely not a place everybody is leaving.
"Auckland is an international city and needs to start behaving like one; it needs to sort out its infrastructure issues like roading and housing."