The return to "normal" market conditions continues in Auckland as values remain stable under depressed levels of activity.
Despite the fact that investor activity has dropped, entry-level properties, especially those which are well presented and under $650,000, continue to transact in a market experiencing depressed levels of activity.
This is understandable given the current affordability challenges and built-up demand from first home buyers. We’re continuing to see a high proportion of properties come to market as price by negotiation as opposed to auction, largely due to reduced demand created by stricter lending conditions.
With less demand, sellers are adjusting expectations and are more open to negotiation in order to get their property sold. In general, this has limited the value growth seen over the previous period and kept prices stable with some softening occurring in properties which have issues or are poorly presented.
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Well-presented properties which offer a good family living environment or those which have straightforward development potential are still transacting at reasonable levels however demand is patchy and timing together with supply in any given suburb is playing a large part. The premiums paid prior to the 2016 LVR restrictions are rarely found under current conditions.
Over the coming months, we anticipate the continuation of the "normalised" market conditions experienced over the past year, and expect minor fluctuations in price through the winter months coming from those under pressure to sell. At this stage any further downward pressure on property prices is likely to come from regulatory change or wider economic risks.
James Steele is QV Auckland Senior Consultant.
