Housing market: Still hot but cooling

While the number of houses for sale remain at low levels, prices keep rising and the latest REINZ House Price Index shows annual house price growth hit a new high of 30.5%.

The median house price across the country hit a new record of $826,000, up from $659,500 in July last year.

Two from 16 regions reached new record median prices, two regions had equal records and 20 districts reached new record median highs.

The median house price for New Zealand excluding Auckland increased by 23.3% from $557,500 in July last year to a new record of $687,400 last month.

Auckland again underpinned the median strength, up 28.0% from $918,000 in July last year to $1.175 million last month.

This growth was reflected throughout the Auckland region with six from seven districts reaching new record median prices – North Shore City, $1.375 million; Rodney District, $1.240 million; Waitākere City, $1.1 million; Manukau City, $1.075 million; Papakura District, $913,000; and Franklin District, $885,000.

In addition to Auckland, three other regions reached record median prices. They were:

• Canterbury: with a 24.7% increase from $477,000 in July 2020 to a new record of $595,000 last month. Additionally, Selwyn District ($740,000), Waimakariri District ($620,000), Tīmaru District ($460,000) and Ashburton District ($458,000) all reached record median highs
• Manawatū/Whanganui: with a 31.8% increase from $440,000 in July last year to a record equal of $580,000 in June this year – flat from last month. Additionally, Palmerston North City ($678,000), Manawatū District ($629,000), Rangitīkei District ($520,000) and Tararua District ($445,000) all reached record median prices
• Southland: with a 16.7% increase from $360,000 in July 2020 to a record equal of $420,000 in July 2021 – the same as last month.

Growth continues

REINZ chief executive Jen Baird says: house prices have continued to rise across the country as every region saw a year-on-year increase from July last year.

The last two months have shown early indications the rate of growth is starting to ease.

However, she says it is too early to say whether this is the usual winter easing or if the Government’s intervention in the market and signalled changes to the OCR are starting to take effect.

The strength of the market has again been reflected in the REINZ House Price Index which reached a new high.

Every region across the country reached a record level in July, indicating the underlying value of property is holding strong and will likely do so for a few months yet.

“Auckland, has reached another record median price, the ninth record in the past 12 months – this growth is spread across the region with six from seven districts reaching new record median prices last month,” Baird says.

Low inventory levels

The number of residential properties sold last month across the country dropped by 11.7% when compared to the same time last year (from 8,135 to 7,187).

July last year was the first full month of real estate market activity post-lockdown and there were an unusually high level of sales.

Last month’s listings were more aligned to the usual winter sales numbers, albeit in a high demand, supply constrained market, says Baird.

“With a 5.3% drop in the number of sales from June, buyers are probably starting to be impacted by the return of LVRs and talk of interest rates rises.

A few more months of data is needed before we can see the impact of these changes and whether or not they are a long-term trend,” she says.

“The availability of property for sale continues to put a constraint on activity, with a record low level of inventory in July and continuing strong buyer demand.

“It is this time of year that people start to prepare their property for the usual increase in spring sales activity.

“On the ground, there are signs of more listing activity including from people who will take possession of a newly built home – a result of the record levels of consents granted over the past year. Played out, this will hopefully mean stock levels increase soon, delivering more choice into the market.

“This should also start to alleviate people’s fear of not finding anything.

“Sellers have been holding back from listing their property until they secure a new property to move into. As we head into the warmer months this fear, and the supply challenges that create it, should ease,” says Baird.