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Sales numbers and median house price increase, despite cooling market

Newshub logoNewshub 13/08/2019 Priscilla Dickinson
Watch: Desperate times, desperate tenants in Tauranga housing shortfall. © Newshub. Watch: Desperate times, desperate tenants in Tauranga housing shortfall.

The middle of winter has done nothing to dampen the spirits of Kiwi home buyers.   

According to new figures from the Real Estate Institute of New Zealand (REINZ), July 2019 was a record month for the number of house sales across New Zealand, up 3.7 percent on the same month last year.  

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Similarly, in line with the REINZ House Price Index (HPI), New Zealand's median house price increased by 4.5 percent - from $550,000 in July, 2018 to $575,000 in July, 2019.

Last month, buyers raked up a record number of 6118 homes across New Zealand, culminating in the highest number of July house sales on record over the last three years.

Excluding Auckland, the number of homes sold in July increased by 2.5 percent to 4224, up from 4120 in July, 2018.

The median house price increased by 6.1 percent to $485,000, up from $457,000.

In summing up the overall increase in sales year-on-year, Bindi Norwell, Chief Executive at REINZ, eluded to signs of dogged determination within the housing market.

"This is the first time in eight months that we've seen the number of properties sold around the country increase on an annual basis, suggesting that we're starting to see some early signs of growth," she said.

"Some of this can be attributed to more certainty post the removal of the Capital Gains Tax, but it's also about pockets of renewed confidence and parts of the market finding its new normal in terms of pricing."

In summing up the climb in median house prices, Norwell said that "median prices across the country continue to increase with 10 out of 16 regions seeing an increase in median price since the same time last year, and five of those regions seeing double-digit growth." 

Auckland average price remains flat, sales up

 

While median house prices in Auckland remained flat at $830,000, the number of homes sold in July increased by 6.6 percent year-on-year to 1894.    

Norwell reported that in terms of the number of properties sold, Auckland had the best July it's had in three years and "the first annual volume growth in eight months".

"Much of the annual growth was led by strong sales volumes in the Papakura District (up 19.8 percent), but there was also strong growth seen in Manukau City (up 18.5 percent) and Waitakere City (up 14.8 percent)," she said.

"The only area in Auckland to see a major slowdown in the number of properties sold in July was [the] Franklin District with a 19.4 percent fall from the same time last year." 

In summing up Auckland's flat average house price, Norwell pointed to a drop in the number of sales of lower and higher end priced properties. 

"While the median price for Auckland remained exactly the same as this time last year at $830,000, it's the lowest median price we've seen in the City of Sails in six months which is a result of drops in the proportion of properties sold between $500,000-$799,000 and between $1 million and $1.99 million," she said.

"Interestingly, there was a slight uplift in the percentage of properties sold for in excess of $2 million from 4.1 percent to 4.8 percent."

Regions with highest increase in sales growth year-on-year

 

The Nelson region chalked up the greatest increase in annual sales volumes, with an increase of 25 percent - 17 additional homes sold compared with July last year - taking the lead for the highest July in four years, to 85 homes. 

Second place for sales was Gisborne, with an increase of just under 15 percent, a total of seven additional homes sold, to 54 homes.

Sales numbers across Canterbury were also strong, increasing 14.6 percent compared with July 2018, selling 842 homes, an additional 107 compared with last year.

Marlborough's growth was also up, increasing 13.7 percent with 10 more homes sold to a total of 83, marking sales volumes this July the highest they've been in the last three years.

Decrease in sales numbers for parts of the South Island

 

The number of homes sold in New Zealand's West Coast dropped by 19.4 percent to 29, seven fewer than in July 2017.

While Nelson showed strong performance, in contrast, sales numbers dropped in the Tasman region by almost 19 percent, to 60 homes sold, bringing the total number sold to 14 less than in July, 2018.

Southland sales dropped by 17 percent to 161 homes sold in July, 33 less than last year.

Record median prices for Manawatu, Wanganui, Otago and Southland

Median house prices in these regions showed signs of catching up, with strong growth in median house prices.

"Prices in the Manawatu/Wanganui region increased the most with a 25.4 percent lift since the same time last year, to $370,000.

"This was led by strong double-digit growth in all seven districts across the region and a 12.5 percentage point increase in properties sold in the $250,000 to $499,999 price bracket," Norwell said.

For Otago, strong median house prices continue.

"July saw a continuation of the strong growth in median prices in Otago, thanks to growth in all districts across the region, bar the Queenstown Lakes District,' Norwell said. 

"A 12.6 percentage point uplift in properties sold between $500,000 to $999,000 meant that this was the first time the Otago region's median price went over the $500,000 mark, making it the seventh region in the country to have a median go over the half-a-million dollar mark."

Average days to sell increased to 40

 

REINZ reported that in July 2019, the median number of days to sell a property nationally increased to 40 days, compared with 37 in July last year.  

"Within Auckland, the median number of days to sell a property increased to 44, an additional three days compared with the same time last year."

Homes within Gisborne and Hawke's Bay were reported to require the least number of days to sell.  

"Both had the lowest days to sell of all the regions at 30 days, down eight eight days and four days respectively from July last year."

Homes within the West Coast and Northland tended to take longer to sell, according to the REINZ report

"West Coast again has the highest days to sell of any region at 90 days, up 21 days [compared with] July last year," the report states.

"Northland had the second highest median days to sell across the country at 60 days – up 11 days on the same time last year."

Looking forward

 

With national sales volumes and median house prices up year-on-year, the housing market is poised for an active start to the spring season.

"With August's surprise 50 basis points drop in the OCR, going forward, we expect to see even more signs of growth - especially as we move towards the warmer weather, when we tend to see more activity in the market," Norwell said.

"Looking around the country, nine out of 16 regions saw annual increases in sales volumes, with strong growth recorded at the top of the South Island and the middle of the North Island. Overall, we saw the highest number of properties sold for the month of July across the country in three years."

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