Prices, sales bounce up - REINZ

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Wednesday 14 March 2018

REINZ chief executive Bindi Norwell

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House prices correct nationally but still some hot spots

Median prices and sales activity were on the rise around the country in February, according to the latest data from the Real Estate Institute (REINZ).

By Miriam Bell

New Zealand’s median house price crept up to $530,000 in February, as compared to $520,000 in January, the data shows.

Once seasonally adjusted, this amounts to a moderate month-on-month increase of 0.8%.

But the year-on-year growth of the national median price was more significant: once seasonally adjusted, it was up by 7.1% on February 2017’s median price of $496,000.

Median house prices increased in 14 out of 16 regions across New Zealand in February, as compared to February 2017, including a record high in the Hawke’s Bay.

Even prices in Auckland rose slightly. Once seasonally adjusted, they were up by up by 3.0% on January and by 3.9% year-on-year to $858,000.

The only regions not to experience an increase were the West Coast and Gisborne which saw decreases of 10.7% and 3.1% respectively.

REINZ chief executive Bindi Norwell points to the Hawkes Bay as the stand-out performer.

She says the region is proving extremely popular with the median price up by 18.4% to $444,000 in February from $375,000 in February 2017.

“The Hawke’s Bay has seen record price increases for two months in a row now, with prices having increased $26,000 since the end of 2017.

“Additionally, the recent government announcement that nearly $9 million will be spent to reopen the Wairoa-Napier line for logging trains will bring significant development for the Hawke’s Bay region.”

In contrast, Auckland’s median price continues to slowly creep upwards but is clearly showing signs of moderated growth, rather than the double digits seen throughout 2016 and 2017, Norwell says.

“This is far more positive for the region as we know double-digit increases are not sustainable in the long term.”

But she adds the Auckland market has entered a busier period and many central areas are seeing an increase in interest.

“It is likely that the market will continue to move along at a similar pace for the next couple of months.”

Meanwhile, the REINZ data shows that sales volumes also increased slightly in February.

Nationwide there were 6,373 properties sold in January. Once seasonally adjusted, that’s a 1.2% increase on January and a 1.6% year-on-year increase.

In Auckland, 1,600 properties were sold in January which, once seasonally adjusted, was a 2.0% increase on January and a 2.7% year-on-year increase.

Norwell says that 9 out of 16 regions saw an increase in the number of properties sold, which points to strong regional growth in the majority of the country.

“From a national perspective, we’ve seen the number of properties sold year-on-year increase for two months in a row now.

“It’s not quite enough data to call a trend, but with nearly 300 more houses sold for the year-to-date when compared to 2017, it’s certainly a positive sign for the industry.”

For Westpac senior economist Michael Gordon the REINZ data shows a further modest strengthening in the housing market and indicates the recent upturn remains on course.

Lower mortgage rates and an easing of the Reserve Bank’s LVRS (effective from January) have helped to support the housing market in recent months, he says.

“However, we still expect house prices to flatten out over 2018 as new government policies – including the extension of the bright line test and the foreign buyer ban - start to bite.”

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