The course of play in the housing market continues to be broadly in one direction, the latest data from REINZ reveals.
Tuesday, September 13, 2022, 12:53 p.m.
by Sally Lindsay
The REINZ House Price Index (HPI) fell another 1.4% in August to be down 5.9% from the same month last year.
The nationwide median home price of $800,000 fell in line with the HPI in August. The rapid rise in mortgage rates this year continues to weigh on the market as servicing debt becomes increasingly costly.
The median residential property price in New Zealand, excluding Auckland, was unchanged from a year ago at $700,000. There was a monthly decline of 2.8% from $720,000.
Four regions saw a year-on-year decline in median price last month. Auckland’s median price fell 8.3% from August last year, falling from $1,200,000 to $1,100,000. Six of Auckland’s seven local authorities recorded negative annual growth – down 13.4%, Waitakere recorded the largest decline, followed by Auckland City where the median price fell 12.3%.
In Wellington, the median price fell 9.3% annually, from $860,000 to $780,000 last month. Carterton saw a median price drop of 25.5%, while Wellington City fell 21.8%. The Manawatu/Whanganui area was down 6.6% from $610,000 to $570,000, and Northland was down 1.2% from $650,000 to $642,000.
All other regions recorded annual increases in the median price. The West Coast saw the largest percentage increase in median price – up 25.0% from $280,000 to $350,000. The median price in Marlborough increased by 14.5%, from $585,000 to $670,000, and Gisborne saw a median price increase of 13.2%, from $500,000 to $566,000.
REINZ chief executive Jen Baird said that over the past six months the median price in New Zealand had fallen 9.6%, while Wellington had seen a 21.6% drop from $995,000 in February 2022 to $780,000 this month. These are the largest six-month declines since REINZ records began in 1992.
“Despite the decline in the median house price across the country and the increase in supply, sales activity remains subdued. These positives for buyers are offset by higher mortgage rates as rising interest rates and inflation concerns continue to put a damper on many potential buyers,” Baird said.
“That said, some real estate agents are reporting an increase in footfall at open homes. And while homeownership remains a dominant force in the market, first-time homebuyers are beginning to reappear. Although affordability remains a challenge, the relaxation of the Consumer Credit and Credit Agreements Act (CCCFA) and the ability to negotiate are attracting savvy first-time home buyers, she says.
no good news
Meanwhile, KiwiBank says it’s hard to find good news in the latest housing market data. But it tried.
For example, there are warning signs that the housing price trough could be on the horizon, says senior economist Jeremy Couchman.
“The 4,891 sales recorded by REINZ in August were up nearly 8% from July (seasonally adjusted data). And compared to last August, sales were down 18%. Up from the 35% year-on-year decline recorded in July.
Crucially, he says annual comparisons of sales from August to September will be skewed by last year’s delta lockdowns – mostly centered on Auckland. “Nevertheless, sales are a predictor of house price movements, loosely leading house price growth by around six months.
“We expect housing prices to be 13% lower by the end of the year. A dramatic fall for sure. But a 13% dip would only bring the HPI back to the levels seen at the start of 2021. From the start of next year, we are seeing a gradual recovery in prices. Progressive because the large supply of new housing far exceeds the demand for new housing,” says Couchman.
“Aside from delta distortions, buyers seem to have the upper hand. The level of listed supply remains high by recent standards. And the high supply is likely to dampen any market enthusiasm in the upcoming spring season.
Couchman further indicates that the median number of days to sell (DTS) a property increased again in August to 49 days. This is the highest SDR since May 2020 – resulting from the first nationwide covid lockdown – and a full 10 days above the long-term average.
“We will want to see a drop in the number of days to sell before we are convinced that house price growth is picking up.”
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