Demand driving house prices: REINZ

They show that the August national median price recovered to reach the May all-time record figure of $350,000, compared with the July figure of $345,000.

Sales slipped further back, from an already low figure of 6,660 in July to just 6,394 in August, well down on the August 2006 figure of 8,556 sales, and the lowest August sales for seven years.

REINZ president Murray Cleland said August sales traditionally recovered as part of the run up to the prime spring selling period, but the latest figures were ‘surprisingly skinny’.

“There has been an almost excessive amount of speculation concerning the residential property market and it is certainly too early to say that it has shrugged off major confidence considerations such as interest rates”.

Cleland says that demand for housing in New Zealand continues to exceed supply and while that situation continues, prices will always be firm. However, he warns that on such low turnovers it is difficult to say from month to month that the market is good, bad, or indifferent.

“There is always going to be an element of distortion in prices when sales volumes are this low and we believe it is probably still at least a month too early to make predictions about the overall direction of the market.

“The market in August showed signs of pausing to absorb interest rate issues and that would have applied to both buyers and sellers contemplating another, or bigger, purchase. By the end of September we will have a much better feel for the long term trend in property prices.

Of the 12 real estate regions, eight experienced rises and only three falls, “which can’t really be attributed to a sudden rise in confidence as much as a function of low volumes and vendor determination”.

Cleland said that the price band distribution of sales showed that sales of houses worth more than $600,000 rose while sales of houses below $599,999 fell, adding to the confusion caused by low volumes.

As with July, the Auckland region helped support the national median price increase with a rise from $445,000 to $450,000. But the rise in the Metropolitan Auckland median from $442,500 to $450,000 was largely due to sizeable increases in Papakura and Manakau City medians while North Shore City, Waitakere City and Auckland City all experienced reductions in median prices.

The Northland median was up slightly from $316,500 to $317,500 while Waikato and Bay of Plenty was also up, from $320,000 in July to $325,000.

The Hawkes Bay continued to show quite pronounced variations, this time back down from the July figure of $287,000 to $275,000 in August.

Manawatu and Wanganui was also weaker, down from $230,000 in July to $215,000, but neighbouring Taranaki was up from $255,000 to $257,500.

Wellington seemed to be divorced from the rest of the country with sales up from 652 to 764 and a jump in its median price from $360,000 to $381,050.

Nelson/Marlborough improved from $320,000 in July to $334,000 in August while Canterbury/Westland was unchanged at $310,000.

Central Otago Lakes was up from $452,500 to $474,500 and Otago improved from $227,875 to $238,000.
But perhaps the most notable change was Southland, coming to the end of a very strong, if belated, rise, with a drop in the median from $185,000 in July to $176,000 in August.

This change meant that Southland surrendered first place in the year on year percentage growth table to Northland.

Southland’s annual growth rate dropped from 26.71% in July to 17.72% in August as a result of the fall, leaving Northland ahead with a 19.81% annual property price growth rate.

Waikato and the Bay of Plenty was third with 14.03% and Nelson and Marlborough is fourth at 13.99%