Records fall in ‘runaway’ housing market

Property sales in November are up nearly 30 per cent on the same time last year after an ‘‘incredible month’’ of selling.

Figures from the Real Estate Institute show 9885 properties were sold in November across the country, the highest number of properties sold in a month since March 2007. Excluding Auckland, the number of properties sold was 6127, up 18.3 per cent compared with November last year. It was the best November for volumes in 14 years.

Prices were also red-hot. Median house prices nationally rose by 18.5 per cent year on year, to a new record of $749,000 – a $24,000 increase in a month. The surprising strength of the gains has left analysts reexamining the reasons behind it.

ASB senior economist Mike Jones said sales were so much stronger than before the pandemic that it ‘‘can no longer be explained away as pent-up demand’’.

Moves were under way to help tame the runaway housing market but the demand-supply problem remained. ‘‘As a result, we remain comfortable with our view for nationwide house prices to maintain a double-digit pace through to around the end of next year.’’

Bindi Norwell, REINZ’s chief executive, said the ‘‘incredible’’ performance of the market had generated turnover not seen since before the global financial crisis.

‘‘Part of this is likely to be attributed to people wanting to purchase property ahead of Christmas, partly due to the Reserve Bank announcing in early November that it would undertake a consultation in December to re-introduce LVRs [loan-tovalue ratios] earlier than planned.

‘‘But [it is] also due to this underlying fear that prices might increase even further in the coming months,’’

Norwell said. Median house prices were now nearly at the $750,000 mark and 11 regions had hit new highs. Price-wise, ‘‘the last time we saw these sorts of records was back in October 2003 when the market was seeing significant increases in house prices’’, she said.

Auckland was particularly strong. The number of properties sold in November rose nearly 54 per cent on last November, the highest number for a November since records began. Prices jumped 16.4 per cent to $1,030,000, a new record high, after hitting the million dollar mark in October.

‘‘For three months in a row now, Auckland sales volumes have been up more than 50 per cent when compared with the same time last year, and with a 45.8 per cent increase in new listings in November, there are few signs of the usual Christmas slow-down,’’ Norwell said.

‘‘It will be interesting to see how long these high sales volumes can be sustained,’’ Norwell said.

Excluding Auckland, house prices were slightly more modest.

They rose 15 per cent to a new median record of $615,100.

The region with the biggest price rise was Tasman, where prices were up annually by 28 per cent to $774,400. It was followed by Manawatu¯ /Whanganui (up 25.8 per cent to $503,000) and Southland (up 23.6 per cent to $395,500).

Taranaki had a 21.7 per cent rise to $496,000 and Marlborough prices rose 19.4 per cent to $585,250 year on year. Bay of Plenty was up 18.4 per cent to $753,000 and the red-hot Wellington

market was up 14.5 per cent to $790,000. Waikato rose 13.2 per cent to $670,000 and Canterbury jumped 13.1 per cent to $526,000.

Jones said it was clear South Island housing markets tended to underperform the national average, which likely reflected their exposure to tourism and a more flexible supply of housing. Looking ahead, he said several factors could take steam off the housing market, including the re-introduction of LVRs, and government pressure on the Reserve Bank to address housing affordability. Several banks had also dampened expectations of negative interest rates next year.

‘‘There are few signs of the usual Christmas slow-down.’’

Bindi Norwell Real Estate Institute