Halo effect growing - REINZ

Auckland’s median price dropped by 1% to $812,000 in April, from $820,000 in March, according to the REINZ data.

Once seasonally adjusted, Auckland’s median price was down by just 0.6%.

But, as compared to April 2015, Auckland’s median price was up by 12.8%, or by 11.4% once seasonally adjusted.

SuperCity sales dropped by 13.2% in April as compared to March but, once seasonally adjusted, they were actually up 16.5% on March.

When compared to April 2015, sales were up by 1.7%, or by 3.2% once seasonally adjusted.

While these figures are more subdued than some of the growth highs the city saw last year, they come on the heels of a significant rebound in both prices and sales in March – the strength of which surprised many commentators.

REINZ chief executive Colleen Milne said the Auckland region has seen a rebound in sales over the past two months with continuing strong demand across most of the region.

“The listing situation has tightened again, with the number of weeks of inventory dropping back to 10 weeks, a near record low.

“Demand remains strong and the adjustment period after the introduction of new LVR rules is over."

The comparatively more sedate nature of Auckland’s market impact on the national data.

Both the national median price and national sales volume were down, as compared to March – although when Auckland was excluded it was a different story.

The national median price dropped by 1.0% in April to $490,000. But it was up by 1.4% once seasonally adjusted and by 7.7% year-on-year.

However, once the impact of the Auckland region was excluded, the national median price rose $29,000 to $382,000, as compared to April.

National sales volumes were down by 10.1% in April, as compared to March. But they were up by 12.8% once seasonally adjusted and by 18.4%, or 19.6% when seasonally adjusted, year-on-year.

Once Auckland’s impact was excluded, national sales volumes were up by 28.8%, or 29.4% when seasonally adjusted, year-on-year.

Record median prices were reached in the Waikato/Bay of Plenty, Taranaki, Canterbury/Westland and Otago regions.

At the same time, all regions experienced increases in sales volume year-on-year, as listings continue to decline around the country.

Milne said April’s data confirmed the continued strength of the market right across New Zealand, which is being driven by a chronic lack of supply. 

It also illustrates the “halo effect” is growing - strengthening in the regions where it is already present, and moving on to new regions, she said.

“House prices are rising across a growing number of regions as Auckland pressure spreads across the country.”

In Milne’s view, the biggest lever that can be pulled to reduce the pressure on house prices is to create more housing supply.

“This is because our current monthly data shows a chronic lack of supply not just in Auckland but increasingly across the regions.”

Meanwhile, Westpac senior economist Michael Gordon said the data showed April was another very strong month for the New Zealand housing market.

“The strength of the rebound in the housing market leaves us comfortable with two aspects of our forecasts.

“First, we expect nationwide house prices to rise by around 10% this year, matching last year's gains. Second, we see it as highly likely that the Reserve Bank will introduce some form of further macro-prudential tightening this year.”