Market Swings Into Action Again
The latest REINZ figures show a notable increase in sales of properties nationwide, as Sally Lindsay explains.
31 July 2023
West Coast and Tasman experienced price increases of 8.1 per cent and 7.4 per cent respectively.
The total number of properties sold across the country last month was 5,629, up from 4,912 in June last year. That is a 14.6 per cent year-on-year increase. New Zealand, excluding Auckland, sales counts increased by 17.4 per cent year-on-year from 3,203 to 3,761.
At the end of June, the total number of properties for sale was 24,676, down 6.1 per cent (1,595 properties) from 26,271 year-on-year, and down 7.5 per cent month-on-month. New Zealand excluding Auckland was down from 15,820 to 15,655, a drop of 165 properties annually.
Nationally, new listings declined by 21.2 per cent, from 7,893 to 6,218 year-on-year, and a 15.5 per cent drop compared to May from 7,359. New Zealand excluding Auckland listings fell 19.8 per cent year-on-year from 4,994 to 4,005.
In the three months ending June, 15,934 sales have been made, a 1.2 per cent increase year-on-year.
REINZ chief executive Jen Baird says agents across the country are seeing more first home buyers at open homes, particularly after the easing of LVR restrictions. “Although activity has increased, caution remains as interest rates, a pending election and further strain caused by the cost-of-living tempers putting pen on paper,” she says.
The median price dropped 8.2 per cent year-on-year to $780,000 from $850,000. The West Coast and Tasman regions bucked the trend with an annual increase in the median price – up 8.1 per cent to $400,000 and 7.4 per cent to $800,000 respectively.
Days to sell have risen to 49: up four days compared to June last year and no change from May 2023.
The REINZ House Price Index (HPI), which measures the changing value of residential property nationwide, showed an annual decline of -9 per cent for New Zealand and a -8 per cent drop for New Zealand excluding Auckland.
A sense of normality may have returned to the Auckland housing market with June property sales more in line with traditional pre-Covid sales patterns, Barfoot & Thompson says.
The agency sold 711 properties in June. The number of sales is comparable with the same month pre-pandemic and 3.9 per cent higher than June last year.
June’s average sales price at $1,097,896 was up 2.5 per cent on the previous month’s average and sat 1 per cent higher when compared to the average price of the three months preceding. The median price at $995,000 increased 4.2 per cent when compared to May.
“There has been an increase in multi-offer bids on properties and the auction rooms have been busy throughout the month. Although the increased activity is not driving up prices it does indicate confidence is returning, which is great news for both vendors and buyers.”
New listings continue to come into the market with 1,266 during June, which is in line with what was expected during the winter. At month’s end the agency had 4,277 listings on its books.
The high end of the market continued to show resilience with 48 homes over $2 million sold in June, knocking May off the second highest monthly sales spot in this category. Properties under $750,000 were also in high demand, with 180 sold during the month.
While Barfoot & Thompson may be optimistic, CoreLogic’s data shows property values across the country weakened in June with the monthly rate of decline accelerating, down 1.2 per cent compared to the 0.7 per cent fall in May.
CoreLogic’s House Price Index (HPI) shows the monthly decline was led by Auckland, down 3 per cent for the month with four out of six of New Zealand’s main centres recording larger falls in June.
The decline takes the national annual rate of change 10.6 per cent below the same time last year, down from -10.2 per cent in May.
CoreLogic’s head of research, Nick Goodall, says the data may be a speed bump for expectations the housing downturn may have already ended, although the variable results evident across the country are likely supportive of the argument that a housing market trough is not far away.
The nationwide average house value remains $183,000 higher than the pre-Covid level in March 2020, but the fall from peak now exceeds $130,000, illustrating just how strong the pandemic-induced growth upswing was.
Reduced supply, paired with high net migration, increased confidence, looser credit requirements (CCCFA and LVR) and near-peak mortgage interest rates, have supported recent higher demand for properties. “Of course, in the same sense, we’re not expecting a flood of demand to lead to a strong bounce back in prices by any means,” Goodall says.
Stretched affordability, due largely to still-high property values and high interest rates compared to recent history, is likely to keep a lid on demand, which should lead to a much more stable and balanced market once the bottom is reached.
Property listings continue to drop, with the lowest June on record nationally recorded by realestate.co.nz.
For Auckland, Waikato, Bay of Plenty, Gisborne, Hawke’s Bay, Wellington, Southland, Coromandel, Central Otago/Lakes District, Wairarapa, Central North Island and Manawatu/Whanganui, new listings were at record lows for any June since 2007.
Year-on-year, listings were down by more than 20 per cent nationally and in 12 of the 19 regions monitored.
The property website had 6,218 new residential listings in June, down 21.2 per cent compared with June last year and down 17.6 per cent compared with pre-Covid levels in June 2019.
A total of 24,676 residential properties were available for sale at the end of last month, which was down just 6.1 per cent compared with June last year.
However, the number of people searching for properties on realestate.co.nz last month was up 8.6 per cent compared to a year ago.
Bucking The Trend
Asking prices continued to weaken, with the national average asking price declining for the fourth consecutive month to $841,688 in June, which means it has declined by $80,744 (-8.8 per cent) since June last year.
One area of the country is continuing to buck the falling average asking price trend. Central Otago/Lakes District hit an all-time record high of $1,484,600 in June. Prices have been rising since the beginning of 2022, in direct contrast to the national average asking price, which has fallen by $129,812.
The tourism mecca seems to be less impacted by the economic factors affecting other regions in New Zealand. Demand is still high for property in this region, plus many of the buyers are from overseas, where they potentially have higher incomes and favourable exchange rates.
Across the country the QV House Price Index dropped by another 1.8 per cent over the three months to the end of June. That comes after a bigger decline of 3.4 per cent over the previous three months to the end of May.
The national average home value is now $891,585, which is 11.8 per cent lower than the same time last year and 5.6 per cent less than at the start of this year.
The latest QV figures show the average quarterly rate of home value decline has slowed in all but two of the country’s 16 largest urban areas – Hastings (-2.2 per cent) and Dunedin (-3 per cent) – with Rotorua (1.9 per cent), Queenstown (2.9 per cent) and Invercargill (0.2 per cent) recording positive growth for the three months ending June 30, 2023.
Values also dropped at a faster than average rate in Auckland (-2.2 per cent), Wellington (-2 per cent) and Tauranga (-2.9 per cent), where the average home has now dropped below $1 million.
In the country’s biggest city, the average dwelling value has dropped more than $200,000 over the year to June. It dropped by $16,685 in June this year alone. Tauranga’s average value declined by $5,420 to $998,737.
QV operations manager James Wilson says low sales volumes continue to result in significant volatility in key housing metrics, resulting in short-term spikes in monthly value changes around the country. “This volatility is likely to continue for a while yet, with the rate of reduction continuing to leap and fall accordingly, but the stats do continue to suggest that value falls are generally flattening overall.”
Building consents continue their downward slide. In the 12 months to May new consents slid to 45,159, down 11 per cent or 5,856 consents on the same time last year.
During May consents for 3,725 new dwellings were issued, a 2.2 per cent fall after a decline of 2.6 per cent in April.
The May consents comprised 1,732 townhouses, flats and units, 1,643 stand-alone houses, 225 apartments and 125 retirement village units.
The total amount of all building work – residential and non-residential – to May this year was $31,449 billion.
What’s Driving House Prices?
HOUSE PRICES: DOWN
The latest REINZ data show the median price dropped 8.2 per cent year-on-year to $780,000 from $850,000. The West Coast and Tasman regions bucked the trend with an annual increase, up 8.1 per cent to $400,000 and 7.4 per cent to $800,000. The House Price Index shows a fall of 9 per cent across the country. Days to sell have risen to 49, up four days compared to June last year.
The Reserve Bank’s official cash rate stays at 5.5 per cent after July’s Monetary Policy Committee meeting. The RBNZ says it is at the end of its tightening cycle.
INTEREST RATES: UP
All major banks – ANZ, Westpac, ASB, Kiwibank and BNZ – have lifted their short-term mortgage interest rates. BNZ was the last of the banks to lift and its one-year special rate moved from 6.99 per cent to 7.09 per cent, its two-year rate from 6.59 per cent to 6.75 per cent and its three-year rate from 6.29 per cent to 6.49 per cent. Standard rates have gone up a similar amount, with a one-year rate now 7.69 per cent and two-year 7.35 per cent.
BUILDING CONSENTS: DOWN
New building consents continue their downward slide. In the 12 months to May new consents slid to 45,159, down 11 per cent or 5,856 consents at the same time last year. However, the number of new houses being built in Auckland is at record levels. In May, Auckland Council issued 1,499 new code of compliance certificates, the highest number issued for a May month since records began in 2013.
MORTGAGE APPROVALS: UP
May’s total monthly new mortgage commitments were $5.9 billion, up $1.5 billion (35.3 per cent) from $4.3 billion in April. Mortgage lending in May was the third lowest on record for a May month. Lending to owner-occupier movers rose $0.9 billion (34.8 per cent) from April to $3.4 billion in May, while investors borrowed an extra $0.3 billion (37.9 per cent) from April to $1 billion in May and lending to first home buyers rose $0.4 billion (35.6 per cent) to $1.4 billion. There were 16,258 new mortgages taken out, up 34.5 per cent from 12,084 in April. In comparison to May last year, the number of new mortgages fell 2.6 per cent from 16,693.
Stats NZ stock measure shows rents rose 0.5 per cent in May compared with April and were up 3.9 per cent for the year.
After a big surge at the beginning of the year, the latest Stats NZ figures show the net monthly gain in May was 4,900, down from 5,800 in April for an annual net gain of 77,800. On an annual basis, the number of migrant arrivals in the May year was the second highest on record.