National sales volumes plummet

REINZ chief executive Bindi Norwell

Once seasonally adjusted, Super City sales volumes’ in June were down by 34.6% on the same time last year and by 5.9% on May.

The fall in sales was accompanied by a decline in the city’s price growth – although, once seasonally adjusted, the median price was up by 2.1% year-on-year to $850,500.

REINZ CEO Bindi Norwell said that while Auckland’s median prices increased slightly year-on-year, the city had the second lowest rate of growth in the country.

In June 2016 Auckland saw 8% annual price growth while in June 2015 it saw 27.1%, she said.

“This is evidence that the Super City has showed signs of price growth slowing down – if you look at the month-on-month figure it shows a drop of -0.8%.”

Strong regional price growth continues, but sales volumes nationally also dropped in the year to June.

The REINZ data shows that, once seasonally adjusted, national sales volumes were down by 26.3% year-on-year while the number of properties sold nationally in June was the lowest in three years.

However, once seasonally adjusted, the national median price was up by 6.3% year-on-year to $529,000 or, if Auckland was excluded, by 11.5% to $431,000.

This suggests that New Zealand’s property market is becoming a two-tier market and the REINZ House Price Index (HPI) for June 2017 further supports this trend.

It shows that Auckland house prices decreased slightly by -0.6% year-on-year while the rest of the country (excluding Auckland) saw 9.2% growth year-on-year.

Norwell said that most regions across the rest of the country experienced double-digit (or close to it) growth.

“Record median prices have been seen in three regions this month – Bay of Plenty ($555,000), again in Manawatu/Wanganui ($280,000) and Tasman ($581,000).

“This highlights the buoyancy across the rest of the country and the normal property cycle where regions are typically behind Auckland in terms of the growth curve.”

Meanwhile, the median number of days it takes to sell a property was up by five days nationally to 36 and the number of properties sold by auction continues to fall nationally.

However, while the number of properties available for sale nationally was up in the year to June, that was driven by a 57% year-on-year rise in Auckland inventory.

Once Auckland was removed from the equation, the number of properties for sale fell by 7.4%.

Norwell said the data showed that a number of things are happening across the market – with inventory levels impacting on pricing but tighter lending conditions.

But talk of a decline in prices might be premature, given median price trends are still rising across many regions, she said.

“The Auckland market is the most mature in terms of the property cycle, however, at worst, prices in the Auckland region are steady at present. 

“With the looming election, Auckland prices are showing all the signs of stabilising that we would normally expect and we anticipate this being a similar trend over the coming months until the election is over.”

Westpac acting chief economist Michael Gordon said the data points to a substantially softer housing market in June – and shows Auckland’s slowdown is spreading.

Not only did sales fall nationally, but price growth slowed nationally in the month of June and this suggest that some further cooling in the pace of house price growth is on the way, he said.

“It’s possible that some of the weakness in the housing market is due to pre-election uncertainty, which also appeared to restrain the market over much of 2014.

“So we can’t rule out some pickup in activity towards the end of this year. But on current trends, even our forecast of a weak 3% rise in nationwide house prices this year is looking on the high side.”

ASB economist Kim Mundy said they expect to see sales activity and price growth remain subdued over 2017, especially in Auckland where prices are most stretched.