Residential property sales hit a trough

REINZ data show sales dropped 32.8% in February from 8,324 in February 2021 to 5,597.  For the month between January and February sales declined 3.2%. February is usually the biggest sales month of the year,

Across the New Zealand, excluding Auckland, sales dropped  28.8% in the February year from 5,412 to 3,856. Auckland was hardest hit with sales declining by 40.2% from 2,912 in February last year to 1,741 - the lowest February sales count since 2019.

Regions with the greatest annual percentage decrease in sales volumes were:

• West Coast, dropping 55.6% annually from 90 to 40 — the lowest sales count for a February month since 2017.
• Taranaki, declining 41.3% annually from 206 to 121 — the lowest sales count for a February month since records began.
• Manawatu/ Whanganui, dropping 40.1% annually from 382 to 229 — the lowest sales count for a February month since records began.

Property prices have remained steady.

Median prices across the country increased with only Auckland and Northland dropping.

In the month from January to February this year the national median price rose from $880,000 to $885,000, giving an annual gain of 13.5%.

It is the third month in a row the median was below the November peak of $920,143.

The median residential property price for New Zealand, excluding Auckland, increased 20.6% from $651,000 in February 2021 to $785,000 — a new record high.

Auckland’s median residential property price increased 8.2% annually, from $1,100,000 in February last year to $1,190,000 — though down 0.8% on January. Since its peak in November 2021, Auckland has seen a significant drop in the annual percentage increase at a level not seen since LVRs started to effectively curtail rapid property price rises in late 2015.

REINZ chief executive Jen Baird says market sentiment has shifted over the past couple of months which is evident throughout the February data.

While prices remain strong, the number of sales continue to drop and an influx of stock across New Zealand is easing demand pressure, which may in turn further ease price growth in the coming months.

Healthy median price increases continue in Canterbury, reaching a record high in February. Selwyn and Waimakariri lead the charge, both having reached record medians in eight of the past 12 months.

“While prices are holding despite the change in market dynamics, there is now a fear of over paying (FOOP) amongst buyers, some of whom will be under additional pressure from legislative and fiscal changes impacting their ability to borrow,” says Baird.

As a shift in sentiment sets in and buyers are less willing, or unable, to pay the prices we saw towards the end of 2021, pressure will come on vendors to adjust their expectations to meet the market.