Property market recovers in July: REINZ

The New Zealand residential property market staged an unexpected recovery in July – with the notable exception of Auckland, according to the Real Estate Institute of New Zealand (Inc).

Tuesday, August 12th 2008, 5:01PM

by The Landlord

The national median price held its own in July at $340,000, underwritten by the fact that nine out of the 12 districts surveyed recorded increases in their median prices, according to REINZ National president Murray Cleland.

“There is an unmistakeable degree of recovery in July, which is surprising given that it is generally regarded as the worst winter month, with good improvement in median prices around the country despite continued low sales volumes, Cleland said.

“However, Auckland was the notable exception, with a further fall in the median price from $435,000 in June to $421,000 on dismal sales of 1,411 properties compared with 1,466 in June and 2,446 in July 2007”.

The Auckland metropolitan median price was down from $440,000 in June to $425,000 in July with the biggest single impact on the Auckland Metro median price being a drop in the Auckland City median from $472,100 in June to $443,000 in July, likely to be influenced by the continuing shakeout of the bottom end of the apartment market.

A drop in sales of properties over one million dollars was also a factor, Cleland said.

“Its not surprising that Auckland is finding itself very much at the epicentre of the current economic recession and in particular the continued fallout from the finance sector collapses, and its therefore understandable that confidence in the Auckland residential market at this point is pretty low.

“However the fact is that for the market nationally to achieve an unchanged median price against the pressure of the declining Auckland market is a remarkably good result in the circumstances and it is beginning to look like the June months figures may have given a poor reading of the market’s health.

Cleland said obvious comparisons would be made with statistics released earlier this week which suggested that the market decline had steepened, “but as we have pointed out before those statistics are based on property settlements, whereas ours are based on unconditional contracts, so inevitably the earlier statistics relate to June sales, reported in July.

“Ours are for July sales made in the same month and therefore will always give a more current picture of the market.”

Cleland said that amongst the many measurements of the market condition provided by REINZ statistics, the annual percentage change was this month one of the more pertinent, with the July year percentage decrease of minus 1.44 % showing a slight improvement over the June 2008 percentage decline of minus 2.15 %.

“If you regard the annual percentage change as a yardstick, then you would have to say, at best, the trendline is certainly not deteriorating as much as some would have you believe, and on a month to month basis, a slight improvement can be detected.

“As for the long term prognosis, there are plenty of people talking about a 10% decline in values, but based on today’s figures, a decline of that magnitude is not evident yet.

“If this is as bad as it gets, then perhaps the market is in better shape than we thought”.

Cleland said reports from agents suggested that sales in June had been impacted by those who had to sell because of personal circumstances, but that in July more vendors were holding to their price because they could afford to.

Sales were up slightly from June’s 4,305, at 4,489 for July with all regions improving, except for Auckland and Southland, who were two of three districts whose medians also declined further.

Days to sell were up from 53 to 58.

Northland’s median price was back up after a big fall in June to $302,750, at $315,00 for July while Waikato and the Bay of Plenty was up from $316,000 in June to $325,000 in July.

Hawke’s Bay provided particularly strong evidence of its recovery with an increase in the median price for the district from $216,000 to $282,000, while Manawatu and Wanganui were up from $213,750 to $233,750.

Taranaki was up from; $255,000 to $265,000 and Wellington was up from $366,500 in June to $371,000 in July.

Nelson and Marlborough were again a little weaker with a median down from $335,000 in June to $330,000, but Canterbury and Westland recovered slightly from $299,000 to $300,000.

Central Otago Lakes district was up from $514,000 to $565,000 but on low sales, while Otago rallied from $225,000 in June to $240,000 in July.

Southland was not interested in any recovery with a further fall in the median from $182,500 to $172,000 but on a big drop in sales from 152 in June to just 129 sales for that district in July.