Homeowners told ‘don’t panic’

Auckland led house prices up in the current boom, but experts are divided on whether it will lead them down again.

Until 2015, Auckland prices shot ahead while the rest of the country advanced more slowly.

Now, figures from the Real Estate Institute of New Zealand (REINZ) show Auckland’s median price is up just 2.5 per cent, year-on-year, while the rest of the country has advanced 11.4 per cent. Auckland prices dropped 0.8 per cent between May and June.

In July 2015, Auckland house prices were increasing at a rate of 27.1 per cent.

REINZ chief executive Bindi Norwell said most other regions had double-digit growth. There were record median prices in Bay of Plenty, at $555,000, Manawatu/wanganui, at $280,000 and Tasman, at $581,000.

She said it was normal for the regions to lag Auckland on the ‘‘growth curve’’. Other areas may take longer to slow.

Sales volumes across the country have continued to decline – in Auckland they are down 33.2 per cent for the year to June and nationally they are down 24.7 per cent for the same period.

‘‘It’s winter and the election is just two months away now, which typically impacts the number of properties sold in the market,’’ Norwell said.

‘‘The number of properties sold across the country is the lowest we’ve seen in the month of June for three years now – particularly in the $500,000-and-under property price bracket.’’

But she said talk of falling prices could be premature.

Infometrics chief forecaster Gareth Kiernan said whether other regions followed Auckland’s slowdown would depend on several factors.

He said a significant drop-off in population growth combined with an economic downturn could slow the housing market across the country.

But Auckland was more susceptible to the impact of interest rate rises, because of the house prices there. If interest rates rose higher or sooner than expected, prices in the rest of the country could hold up better than Auckland’s, he said.

On the flipside, Auckland still had a significant undersupply of housing. Other regions do not have this supporting factor.

Analyst Rodney Dickens said some parts of the country were still in catch-up mode and would be for some time.

He said it was to be expected that the parts of the country that performed most strongly in one boom tended to underperform in the next boom.

Meanwhile, Trade Me data shows that the average asking price of the typical New Zealand property dropped 1.2 per cent in June to $632,850 – and that drops seems to be more widespread.

Nigel Jeffries, head of Trade Me Property, said homeowners had no reason to panic. ‘‘The ‘halo’ regions are still powering on as the Auckland effect continues to ripple out, and Otago has emerged as a powerhouse, with the average asking price jumping 50 per cent in the last five years.’’