Factors right for house price fall
Conditions are right for a property price drop, but so far values are holding stubbornly firm.
Usually, for prices to stall, you need a change in the supply and demand equation. That means fewer buyers or more properties to choose from.
The latest Real Estate Institute figures show that scenario is playing out, in Auckland in particular. The number of sales in May was down 27.5 per cent in Auckland compared to the year before, and 13.6 per cent across the rest of the country.
And homeowners are still putting their properties on the market. Auckland recorded an almost 50 per cent increase in properties for sale in May compared to 2016.
Chief executive Bindi Norwell said the drop in sales volumes and higher inventory, as well as a drop in auction sales, might usually create an expectation that prices would soften. ‘‘Prices are still holding, which is interesting.’’
Auction sales numbers have more than halved. But Auckland’s median house price was up 5 per cent on 2016, and 1.6 per cent on April, to $865,000. Seasonally adjusted, house prices dropped 0.7 per cent over the month.
Norwell said it was likely that higher-end properties in good areas were holding their ground and were still sought-after. Migration and a lack of new building kept pressure on prices.
It is a different story in other parts of the country, where there are still fewer properties available for sale than there were last year and some markets are recording double-digit percentage price growth.
Norwell pointed to Northland, Manawatu and Nelson, which have all had year-on-year price growth of more than 20 per cent. Northland is near 30 per cent and has hit another record median price.
Regional areas that were more affordable and attractive for people moving to New Zealand, or deciding to stay in the country, could expect strong growth to continue, she said.
The national median house price increased 6.7 per cent to $540,000, or $430,000 excluding Auckland.
The Real Estate Institute’s house price index indicates
There's no need for homeowners to worry. Nigel Jeffries, head of Trade Me Property.
activity nationwide is up 5 per cent on an annual basis. In Auckland it is up 1.8 per cent, and outside Auckland up 11.1 per cent. But compared to April, it is down 0.4 per cent nationwide, down 0.7 per cent in Auckland and up 0.2 per cent for New Zealand excluding Auckland.
The median days to sell nationally increased by five to 37 days, compared to 32 days in May 2016. Regionally, Hawke’s Bay had the shortest median days to sell at 30 days followed by Wellington and Nelson/Marlborough at 31 days.
Mieke Welvaert, of Infometrics, said the decline in sales in May was more widespread than expected. The only areas that recorded an increase, year-onyear, in sales were Tasman, Nelson and the West Coast, which together only accounted for 3 per cent of total sales.
Trade Me Property’s May data shows the average asking price of a typical New Zealand house dropped 0.6 per cent in May from April. Across, the country, the average was $640,650.
‘‘Asking prices are still up almost 10 per cent on a year ago, but we’re seeing signs that a slowdown is starting,’’ said head of Trade Me Property Nigel Jeffries. ‘‘There’s no need for homeowners to worry, the market is still doing exceptionally well, but buyers will be pleased to see that the rate of growth appears to be easing back.’’