Soft market due to more than winter chill

National sales activity continues to slow, with sales volumes in June dropping by 5.4%, once seasonally adjusted, on May.

Further, June’s property sales nationwide were down by 1.5%, once seasonally adjusted, to 6,034 as compared to June 2017 which saw 6,131 sales.

REINZ chief executive Bindi Norwell says there were significant decreases in sales volumes in eight out of the 16 regions, alongside a 9.9% decrease in new property listings year-on-year.

“From a volume perspective, we’ve seen the usual winter slowdown impact the market.

“Sales volumes fell significantly year-on-year on the West Coast which had its lowest sales count for 14 months, Waikato which also its lowest sales count for 14 months, and Otago which had its lowest sales count for 11 months.”

The trend was evident in the main centres too.

In Auckland, once seasonally adjusted, sales activity was down by 6.9% from May and by 3.8% year-on-year.

In Wellington, sales activity was also noticeably down – by 4.9% from May and by 7.6% year-on-year, once seasonally adjusted.

Despite the widespread fall in sales activity, the data shows that some regions did see a strong increase in sales including Hawke’s Bay (+23.0%), Tasman (+22.8%) and Manawatu/Wanganui (+14.1%).

Norwell says that while the winter chill has impacted on sales volumes across the country in June, it has done little to halt price rises in most regions.

The national median price hit a record equal medium of $560,000 in June. This was the same as last month, but up by 5.2% year-on-year, once seasonally adjusted.

Three regions saw record median prices and solid year-on-year increases, once seasonally adjusted, in June.

Waikato’s median was up by 11% to $525,000, Wellington’s was up by 10.5% to $595,000 and Marlborough’s was up to $440,000 – although this was a year-on-year rise of just
1.3%.

A number of other regions also saw strong annual price increases. They included Gisborne which was up by 23.7% to $330,000 and Hawke’s Bay which was up by 15.3% to $430,000.

However, Auckland’s median price bucked this trend. Once seasonally adjusted, it was down by 1.6% year-on-year to $850,000 from $856,000 last year.

Norwell says the lack of housing supply continues to put pressure on prices in the majority of regions across New Zealand, with 12 out of 16 regions seeing a price increase since June last year.

“Until we solve the supply issue, house prices are likely to continue rising, particularly as the OCR remains low and the banks continue dropping interest rates.

They are seeing a two-tier market across the country where prices are remaining stable in Auckland and Canterbury but rising in most other parts of the country, she adds.

For Westpac senior economist Satish Ranchhod, the REINZ data for June continues to point to a soft housing market with price growth taking a notable step down through the first half of 2018.

Underlying the softness in the national figure has been Auckland where, despite their elevated level, prices have been tracking sideways for nearly two years and had another fall in June, he says.

“Outside of Auckland, we’re continuing to see prices rising – but noticeably slower than in previous years. There’s been notable softness in Canterbury as the housing market there continues its post-earthquake adjustment.”

Ranchhod says housing market conditions have been dampened by policy changes targeting property speculation.

These include the extension of the bright line test, foreign buyer restrictions on foreign buyers and, from early next year, the phasing out of negative gearing.

“We expect that these measures will weigh on price growth over the coming year and are also likely to dampen people’s willingness to spend.”