Building material prices to rise across the board in July, but Auckland house prices recorded their biggest fall in 5 years in May: the outlook grows harder to predict!
An industry insider has revealed that prices for major building materials in New Zealand, including timber and cement, will rise from day 1 of month 7! The expected increase is 3–5 percentage points.
An industry insider has revealed that prices for major building materials in New Zealand, including timber and cement, will rise from day 1 of month 7! The expected increase is 3–5 percentage points.
The building materials salesperson said they had already received price increase notices from suppliers. The increases were scheduled for July “because July marks the start of the new financial year”.
The source said rising log prices were linked to growing demand from China. “The price of logs has already gone up by the time they are felled in the hills.” Rising demand for cement, meanwhile, was being driven by New Zealand’s thriving construction industry. “Just look at how many tower cranes Auckland has and you’ll see how busy construction is!”
The direction of Auckland’s property market is becoming increasingly difficult to judge. On the sales side, the market is cooling, properties are taking longer to sell and prices continue to trend downwards. Meanwhile, construction is exceptionally buoyant, the central bank and commercial banks are cutting interest rates, and building material prices are set to rise again.
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Among the factors influencing house prices, including population, mortgage interest rates, policy and costs, only New Zealand government policy is currently exerting downward pressure.
New Zealand may see a second interest rate cut in the latter half of this year, and the likelihood of a US Federal Reserve rate cut has also risen sharply. However, Labour is also highly likely to be re-elected.
The contest between upward and downward pressures on Auckland house prices is becoming ever harder to untangle!
Trade Me releases its latest property price index
Trade Me’s latest property price index shows Auckland house prices have recorded their biggest fall since 2014, with the average residential asking price dropping 1.9% to NZ$90.17.
Nigel Jeffries, head of Trade Me Property, said that although the price decline appeared relatively small, it signalled that Auckland’s property market was heading into a slump after years of growth.
“Prices have been flat for several months. It looks as though the froth is coming off Auckland’s property market and prices are heading downwards. With government restrictions on overseas home buyers and new rental property rules, Auckland’s property market will see fewer overseas buyers and investors, pulling prices down.”
No area is immune to a wider downturn. Although location is the golden rule of property, prices in some widely recognised desirable areas also fell in May.
Nigel Jeffries said, “In month 5, asking prices in Parnell fell 14.8% to NZ$1,436,250, while Ponsonby’s fell 4.1% to NZ$1,607,750.
Average asking prices in Remuera also fell 7.8% to NZ$1,957,100, while Mission Bay recorded a fall of 8.7% to NZ$1,645,300.”
Surprisingly, apartments have instead become Aucklanders’ favourite property type.
“The number of apartments sold in month 5 rose 19% year on year. Growing interest in apartment living pushed apartment asking prices up 11% year on year to NZ$68.04.”
Compared with month 5 last year, new listings in Auckland’s property market in month 5 this year rose 2.3%. Jeffries said this showed demand was still there, but buyers were unwilling to pay the prices seen 12 months earlier. Sellers therefore needed to “readjust their expectations for now” or hold on until the market recovered.