Auckland's annual house price fall largest since 2010

Real Estate Institute (REINZ) figures for October show median prices in the Auckland region fell by 3.2 per cent year on year to $850,000 - the biggest fall since December 2010.

But within the old Auckland City boundaries (the CBD and central suburbs) the median price has fallen 17 per cent from $1.025m to $850,000 since October 2016.

Home owners shouldn't panic though. That doesn't mean the average house price has fallen by anything like that much.

The fall in median has been driven largely by an increasing number of apartments coming onto the market in the past year.

The median in the Auckland CBD is down 24 per cent year on year and in the central suburbs of the Maungakiekie-Tamaki Ward it is down 14 per cent.

"The Auckland Region's decrease of 3.2 per cent year-on-year is predominantly the result of a large number of apartments being sold in the old Auckland City boundary which has therefore brought the median price down for the entire region," said Bindi Norwell, CEO at REINZ.

The increase in supply of cheaper apartments was improving affordability without causing a crash in the wider market and was a positive for first home buyers, she said.

"So there's a lot of cranes and development happening in the inner city and a lot of new apartment blocks," Norwell said. "They are cheaper than family homes, they are more attainable which is potentially a good thing for first home buyers."

The Unitary Plan had created more opportunity for new apartment builds throughout the city and beyond the CBD, she said.

"If you think about Auckland City, it was a median of over $1 million last year and now its $850,000 so it really does show the level of opportunity that has opened up."

Norwell noted that the REINZ House Price Index (HPI) for Auckland City decreased just 0.8 per cent year-on-year, even though the median for the same period fell by 17 per cent.

This is because the HPI considers the mix and value of the property sold, not just the sales price," she said.

On a month on month basis the HPI showed Auckland wide house prices were 0.4 per cent up. They were down 1.2 per cent year on year.

The only other region across the country to experience a fall in the median price year-on-year, was Nelson, which saw a decrease of 6.8 per cent to $447,500 - the biggest drop since April 2012.

Every other region in New Zealand rose taking the median house price for New Zealand, excluding Auckland, to a record price of $440,000 (an 8.5 per cent increase).

The volume of sales also remains subdued though, with economists blaming the ongoing uncertainty around the election result through October.

The number of properties sold across New Zealand was down 16 per cent year-on-year to 5,689.

Volumes for New Zealand, excluding Auckland, were down 14 per cent year-on-year to 4,057 and Auckland's sales count was down 21 per cent to 1,632.

The median number of days to sell a property nationally increased by 2 days (from 32 to 34) when compared to October 2016.

ASB economist Kim Mundy said the uncertainty about a new Government in October meant the subdued sales data was not a surprise.

"Ongoing soft sales activity is taking some of the heat out of the market and weighing on price growth," she said. "We expect sales activity and price growth to remain subdued into 2018 given uncertainty around the impact of the new housing policies."

KiwiBank chief economist Zoe Wallis agreed that the data reflected the uncertainty around the election result but suggested underlying demand would likely drive a "small rebound" over the coming months as political uncertainty waned.

"There remains a notable supply and demand imbalance in the housing market as population growth continues to out-strip growth in housing supply," she wrote.

"While net migration may have peaked, it remains supportive of strong population growth and housing demand. In addition, mortgage rates, while they are marginally higher than this time last year, remain low by historical standards and should also support demand."