Sales plunge by nearly 10%

Residential property sales nationwide took a big tumble in February – but capital gains tax related uncertainty could be to blame.

Wednesday, March 13th 2019, 1:19PM

by The Landlord

The latest REINZ data is out and it shows there were 5,954 sales in February, as compared to 6,576 in the same period last year. That equates to a 9.5% decline in sales volumes.

In Auckland, the number of properties sold in February fell by 17.9% year-on-year from 1,654 to 1,358. That’s the lowest for a non-January month since October 2010.

Several other regions also saw significant falls in sales. They were Northland (down by 27.2%), Nelson (down by 20.0%) and Otago (down by 14.9%).

REINZ chief executive Bindi Norwell says 13 out of 16 regions actually saw an annual fall in the number of properties sold – at a time when sales volumes are normally strong,

“The lower level of sales volumes compared to the same time last year can be attributed to a number of things: the raft of legislative changes impacting the housing market, the increasing difficulty in accessing finance and vendors’ pricing expectations.”

She says that salespeople around the country are telling them that vendors and investors are taking a ‘wait and see’ approach to the housing market.

“This is particularly true in relation to the recently announced capital gains tax proposals from the Tax Working Group.

“Families want to know what aspects of the proposals the Government will look at accept ahead of next year’s election and what impact that will have on them and their family.”

Despite the fall in sales, median house prices in many regions have kept on rising.

Median house prices nationwide increased by 5.7% to $560,000 in February, as compared to $530,000 in February 2018.

Fifteen of the 16 regions saw an annual increase in their median price, with five regions seeing record median prices.

They were Gisborne (up 25.8% to $390,000), Manawatu/Wanganui (up 23.4% to $352,000), Southland (up 20.8% to $290,000), Wellington (up 16.2% to $640,000) and Hawkes Bay up 6.4% to $472,500).

Norwell says this highlights the strength of the housing market around much of the country.

“With house prices continuing to rise at such a pace, this puts even more of a dampener on any notions of New Zealand following in Australia’s footsteps in the short to medium term.

“Even Auckland saw an increase from January, showing it has returned to the same, stable or flat market we’ve been seeing since April 2017.”

In Auckland, median prices were down by 0.6% to $850,000 in February, as compared to $855,000 last year. But they were up by 5.6% on January’s median price of $805,000.

Additionally, some areas of Auckland did see annual price growth.

Median prices in Auckland City were up by 3.9% to $1,000,000, while Papakura District saw an increase of 3.8% to $649,000 and Franklin District saw an increase of 2.3% to $670,000.

The tight number of properties available for sale continues to be an issue.

There was a small annual decrease of 0.3% in amount of stock on the market nationwide in February, while new listings fell by 6.5% nationwide year-on-year.

Wellington had the lowest amount of inventory, with just eight weeks’ worth available to prospective purchasers. This was closely followed by Otago and Hawke’s Bay on only nine weeks’ inventory.

Norwell says they expect that the ongoing pressure on inventory will result in price increases in affected regions, potentially pushing people to more affordable areas in other regions

However, seven regions saw an annual increase in inventory levels. They were Taranaki, Auckland, Hawkes Bay and Marlborough.

Tags: capital gains tax CGT house prices housing market housing shortage property investment property values real estate REINZ tax working group