Subdued market more balanced

Auckland’s housing market slowdown is spreading with the latest Real Estate Institute of New Zealand (REINZ) data showing flat prices and declining sales nationally.

Wednesday, June 14th 2017, 11:10AM

by Miriam Bell

REINZ chief executive Bindi Norwell

The national median house price stayed flat at $540,000 in May, according to the REINZ data. This was also April’s median price and it was a drop from March’s record high of $542,500.

But it was up compared to the same time last year. Once seasonally adjusted, the national median price increased by 6.2% year-on-year from the May 2016 median of $506,100.

At the same time, seasonally adjusted sales volumes nationwide were down by 22.2% year-on-year.

While Auckland’s much slower market will have had some impact on the national data, seasonally adjusted sales volumes excluding the Super City declined by 17.4% year-on-year.

The Super City’s median price actually increased slightly in May as compared to April. It came in at $865,000 which was a 1.6% increase on April’s median of $854,500.

However, once seasonally adjusted, Auckland sales volumes were down by 31.2% year-on-year and the number of properties for sale in the region was up by 47% year-on-year.

REINZ chief executive Bindi Norwell said that the 5% year-on-year increase in Auckland’s median price showed that price growth in the market continues – albeit at a slower rate.

“With sales volumes down, inventory levels increasing, the number of days to sell increasing and the level of auctions decreasing you might have expected to see prices decreasing in Auckland.

“But that isn’t the case.”

This can be explained by looking at the wider fundamentals currently at play in New Zealand, Norwell said.

“Given the considerable mismatch between population growth, increasing immigration figures, low interest rates, high housing demand and low building consents and housing supply, it’s clear why prices are still rising, although at single rather than double-digit growth levels.”

Overall, the REINZ house price index (HPI) indicates that housing market activity remains stable with some strong price growth in certain regions.

Four of the 14 regions saw record median prices in May. They were Northland ($450,000), Manawatu/Wanganui ($269,000), Nelson/Marlborough ($483,250) and Southland ($238,000).

Further, once Auckland was excluded, the number of properties for sale around the country fell by fell by 2,683, or 14%.

Norwell said the data clearly shows continued buoyant activity across a number of regions which contrasts with the continuing stability of the Auckland region.

They are seeing a continuing trend of strong median house price growth in many of the regions year- on-year, although a lack of inventory continues, she said.

“We believe that overall buyers are being more cautious. We’re heading into winter which traditionally sees a slowdown in activity, we’re in an election year, and first-time buyers are finding access to capital more difficult.

“This goes some way to explaining the intricacies of what we’re currently seeing in the New Zealand market.”

The REINZ data indicates a more balanced market, according to ASB economist Kim Mundy.

While sales activity, both nationally and in Auckland, increased in May it remains subdued compared to the same time last year, she said.

“The fact that the median days to sell figure continues to tick higher suggests that buyers are losing the sense of urgency they had this time last year.

“Indeed, the REINZ HPI reflects the fact that the imbalance in the market has lessened lately, with house prices dipping slightly in many regions over the month.”

ASB expects to see activity and price growth slow over the remainder of 2017, especially in Auckland where prices are most stretched, she said.

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