OPINION: All Not Doom In The Housing Market

OPINION: A casual review of current media coverage on the housing market, especially as it relates to Auckland, has it that prices are once again under pressure and it is facing an uncertain future.  

Is that a fair assessment of the situation? Or is it a ‘glass half full’ take on the situation whereas applying a different mindset would have a market which is slowly and steadily – with the occasional backward step – climbing back out of a major market correction.

My view is on the side of those who believe that given where the market has come from, and the current state of the economy and level of mortgage interest rates, the housing market is doing not too badly.

In answering my own question, the first point to resolve is what constitutes a healthy housing market in an economy that is seeking to tame high inflation and low economic growth.

Where is the sweet spot in terms of prices and market turnover? Is growing turnover and stable prices better than low turnover but rising prices? Surely prices alone are no measure of health!

Naturally, buyers and vendors are likely to have different perspectives, but where do those who are not actively involved in the housing market sit? How would we prefer the housing market to be performing as part of the overall economy as we try to get more momentum into the economy in general.  

Putting aside prices, from a turnover perspective, the Auckland housing market is trading reasonably well in 2024.

Based on our sales data*, in the first 5 months of the year we sold a third (actually 36%) more homes than we did in the same 5 months last year.

The actual figures for the past 5 years are

2024     3818 homes

2023     2852 homes

2022     4128 homes

2021     6358 homes

2020     3526 homes

Sales in 2022 and 2021 were abnormally high, and you have to go back to 2015 to find turnover numbers comparable to those recorded when prices peaked.

The median selling price for properties sold in the first 5 months of this year is $1 million, which is spot on with the median price for the same 5 months last year. The average sales price, at $1,164,000, is 6.3% higher.

The turnover gains in 2024 have not been at the expense of lower prices. Rather, it is buyers being prepared to live with where prices are at.

While prices remain below where they were in 2022 and 2021, they remain above the ‘floor’ established in mid  2023.

Another good measure of the health of the housing market is the number of days it takes for a property to sell.

The Real Estate Institute’s May 2024 Property Report states that this figure nationally is currently 44 days. While this is significantly higher than it was in 2022 and 2021, it is 5 days lower than it was in May last year.

With turnover up, days to sell down and prices stable, those of a glass half full persuasion are entitled to reach the conclusion that all is not doom with the housing market.

Peter Thompson, Managing Director,  Barfoot & Thompson

*The figures I have used in this analysis are based on our company sales data. I have used this data as I have ready access to the detailed information. As our sales for the period represents more than 40% of all Auckland residential sales, I consider them statistically valid to represent the total Auckland market.