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Tony Alexander BNZ Economist ‘Weekly Overview’ 17th March 2016

By Julie Halligan

Lets get right to the basics of the Auckland housing market.
1. There are signs that Chinese buyers are returning. If true then extra demand lies ahead, one day to
be added to by buyers from India.
2. Interest rates have just been cut, further cuts lie ahead, the pool of savers needing to boost yield
through assets other than bank deposits has grown again and will grow further.
3. There remains a big stack of young people wanting to buy property, some catching up on buying
they have delayed since 2007.
4. Ney migration inflows are not only high and expected to stay high, they are still growing and 60% of
the net flow goes to Auckland.
5. The number of dwelling consents being issued in Auckland is running at about half the number
needed just to stabilise the shortage at current levels.
The Auckland housing market has been in pause mode since about October last year. We can see this in
the Days to Sell measure which went from 3.5 days faster than average in September, 4.2 days in August
and 5.1 days in July to only 0.9 days in October, 0.4 days slower than average in November, 0.4 days faster
in December and only 0.1 days faster than average in January. I’ll tell you February’s outcome further along.
The stratified median dwelling sales price rose 2.6% in August and 3.3% in September, then fell 4% in
October, was flat in November, then fell 2.3% in December and again in January. I will tell you February’s
result below.
The Auckland market has paused since October and that was when the requirement for all buyers to have
an IRD number came into play along with the two year bright line test for capital gains tax. And from
November 1 all investors needed at least a 30% deposit.
But now look at the February numbers. The Days to Sell measure in Auckland for February was 3.7 days
faster than average. Back at September’s level. The median stratified dwelling sales price jumped 5.5%.
The upshot? There are growing signs that after pausing for four months the Auckland market is sparking
back into life with new assistance now from the latest easing of monetary policy and indications of more to
come. Will the return of Auckland strength be at the expense of the rest of the country’s surge? No. Its a
nationwide phenomena now.’

For the full report please follow this linkTony Alexander 17th March 2016

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