Past the peak?

Friday 12 May 2017

Declining sales and a drop in prices in Auckland in the latest REINZ data indicate the region’s market has passed the peak of its cycle.

By Miriam Bell

Auckland sales activity was down by 8.3%, once seasonally adjusted, in April as compared to March, according to new REINZ data out today.

Once seasonally adjusted, sales were down by 32.3% year-on-year.

The region’s median price was also down – by 2.1% once seasonally adjusted – to $854,500 in April, after hitting a record in March.

Price growth was still up year-on-year, but it slowed considerably to just 3%. This stands in stark contrast to the 24% growth recorded in 2015.

Further, the Auckland region continues to see an increase in inventory levels.

There were almost 2,500 more homes for sale in April compared to 12 months ago and the number of weeks of inventory is now the third highest in the country.

REINZ CEO Bindi Norwell said this suggests Auckland is further through the property cycle than other markets, which still see strong sales volume and price growth and an accompanying decline in inventory levels.

The REINZ House Price Index shows that Auckland market activity has been stable, up 5.2% over the year, she said.

“But as inventory levels continue to move higher, with Auckland now having more inventory than the national average, we will watch activity with interest.”

Around the rest of the country, the national median price remained stable while several regional markets hit new record median prices – despite a fall in sales activity – in April.

Once seasonally adjusted, the national median price dropped slightly, by 0.5%, to $540,000 in April as compared to March’s record high of $542,500.

However, the national median price was up by 10.4% year-on-year.

The three regional markets to set new price records were Waikato (up 22.3% year-on- year to $489,200), Wellington (up 18.8% year-on-year to $537,000) and Otago (up 12.7% to year-on- year to $381,000).

On a seasonally adjusted basis, there was a decline in the number of sales. They dropped by 9% from March to April.

Norwell said the data for April shows that the market is reasonably stable, despite the impact of a number of factors on activity right across New Zealand.

“These include severe weather in April - one of the wettest on record - and the combination of Easter (which fell in March last year), plus school holidays and ANZAC Day.

“Anecdotal evidence suggests that in some regions this was the dominant feature of the month.

“Importantly though, the overall tone of the market remains broadly positive, with price and sales volume drops broadly typical in April.”

This is further confirmed by the new REINZ House Price Index, she added.

It shows that month-on-month activity nationwide was up 0.4%, Auckland up 0.2% and outside Auckland up 0.8%, indicating stable market activity.

Over the last three months, nationwide activity was up 1.4%, in Auckland up 0.8%, and outside Auckland up 2.5%.

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