Dawn Chorus for Thursday, January 11

TL;DR: Auckland house prices bounced 9.5% in the last five months of 2023 as buyers surged back into a market feeling double-digit rent inflation, slowing new housing supply, a surge in population growth and seeing an election result that revitalised the outlook for after-tax returns for landlords.

The real estate agency group responsible for nearly half of Auckland’s house sales, Barfoot and Thompson, yesterday reported a total of $988 million worth of house sales in the month of December, up 63% from December 2022.

These are the first sales figures available for December and the first substantial sales figures since the new National-ACT-NZ First Government was sworn in on November 27. The median sales price of $1.045 million was the highest in a year and up 9.5% from July. It rose 2.7% in the month after the election result and 3.9% in the last four months of 2023, implying annual growth rates of between 11.7% and 32.4% in the final quarter of 2023 as a National-ACT win became clearer and was then confirmed.

‘Sales numbers are similar to trading patterns experienced prior to the big surge in activity in 2020 and 2021.’ Barfoot and Thompson MD Peter Thompson

I speculated in May last year a clear National-ACT election win would force residential land prices up 10-20% overnight because of their policies of improving tax rules for landlords and reversing a ban on foreign buying of housing, albeit above a $2 million threshold. The foreign buyers ban is staying because National and ACT needed NZ First, but the tax improvements are being accelerated and Government funding for transport and water infrastructure necessary for new housing has been frozen. It is also enabling councils to opt out of rules encouraging more brownfields housing.

Meanwhile, Corelogic reported this morning its Cordell Construction Cost Index for the December quarter found house construction cost inflation ran at an annual rate of 2.4%, which was the lowest in seven years and the second-lowest since the series began 10 years ago. It was also just over half the long-run average of 4.5%, which Corelogic said reflected downward pressure on wage inflation because of record-high migration of workers on temporary work visas.

Elsewhere in the news in Aotearoa-NZ’s political economy this morning:

• The Green Party stood down list MP Golriz Ghahraman from her portfolio responsibilities while Police considered a shoplifting complaint against her by Ponsonby boutique Scotties. RNZ

• The Union Network of Migrants within FIRST Union is set to meet some of the more-than-500 migrant workers stranded without work, pay and homes after the collapse of labour hire firm ELE Group just before Christmas left them without jobs and on visas that stop them working for others. Some are living in cars. RNZ

• NIWA reported yesterday 2023 was Aotearoa-NZ’s second-warmest year ever behind 2022, while Auckland had its wettest year ever, including 265mm falling on Mangere Airport in six hours on January 27, which was a quarter of its usual rainfall for an entire year, and 561mm falling on February 13 in the Esk Valley, which is ten times the area’s usual rainfall for the entire month of February.

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Auckland’s housing market poised to repeat 2020/21 boom