First-home buyer activity in Auckland slides

First home buyer activity in Auckland is starting to slide, in what may be a warning sign for the country's' largest housing market.

The latest OneRoof-Valocity figures show the median value for all properties in Auckland has dropped 3.7 per cent year on year to $825,000.

Much of the decline is due to further drops in values in North Shore and Central Auckland suburbs but periphery locations such as Papakura, Rodney and Waitakere are now also beginning to soften.

OneRoof editor Owen Vaughan says the share of new mortgage registrations to first home buyers for July was down one percentage point on the month before, which may indicate a retreat from the market.

"First home buyers are the biggest buying group in Auckland, but there is a limited pool of housing stock in the city that's within the affordable price bracket - $500,000 to $850,000," he says.

"The upper end of the market isn't as active as it was during the boom years, with many homeowners in the $1m-plus bracket either deciding against selling or hanging their hat on an unrealistically high sale price. If first-home buyer activity drops, then the worry is there'll be no buyer group to fill the void."

James Wilson, director of valuation innovation for OneRoof's data partner Valocity, agrees: “Although the drop is small, the figures suggest first home buyers may be reaching their affordability limits.

“Overall sales volumes continue to decline, but perhaps more relevant is the fact that these are declining more noticeably at the higher price brackets.

"In Auckland, nearly 75 per cent of all sales transacted below $1 million, with sales of $1.5 million-plus representing only 7.6 per cent of sales.

“This has the impact of distorting an overall statistics for an area as the composition of what is selling shifts downward when compared to previous years."

Despite these concerns, Wilson is not tipping house prices to tumble. Auckland still has a shortage of housing and more new residents arriving in it than leaving, he says.

Nick Goodall, the head of research for analysts CoreLogic, says it's "clear values are going backwards in Auckland" after the CoreLogic QV House Price Index showed city prices had fallen 2.6 per cent in the past year.

Auckland houses are now also taking longer to sell, while the number of homes listed for sale in the city was the most it had been in five years, he says.

This means the "strong fundamentals" propping up Auckland's house prices are likely to prevent a crash as had been seen in some Australian cities, but at the same time "it was hard to see where a lift in Auckland prices" would come from.

House prices nationally remained steady, with the median sale price dropping just 0.3 per cent year on year to $550,000, according to OneRoof-Valocity house price figures for July.

Regions with more affordable housing stock benefited most in the latest set of figures, with the median sale price for Gisborne, Manawatu/Whanganui, Otago and Hawke's Bay all enjoying double-digit gains year on year.

Of the major urban markets, Wellington and Dunedin saw the biggest gains, with the median sale price in capital up 7.1 per cent year on year to $648,000 and up 7 per cent to $422,600 in Dunedin.

Christchurch's median sale price was marginally down 0.5 per cent to $433,000.

It is expected banks are likely to continue offering record low interest rates to homebuyers after the Reserve Bank to further cut the official cash rate by half a percentage point to a fresh low of 1.0 per cent today.