House prices up by a third
National house prices increased by a median $200,000 between May 2020 and last month, new data from the Real Estate Institute (REINZ) shows.
It has released its update for May, showing price growth of 32.3 per cent, or from a national median $620,000 last year to $820,000. That is the fastest annual house price increase since records began. Five out of 16 regions hit record median prices.
Auckland’s median price increased by just under 27 per cent to $1.148 million. Taranaki was up just over 29 per cent to $550,000, Canterbury up 26.5 per cent to a median $582,000 and Waikato up 21.7 per cent to $730,000.
Real Estate Institute acting chief executive Wendy Alexander said there were now fewer record median prices being set but the market was still strong.
‘‘Median prices haven’t significantly eased yet as many had hoped would be the case, and things are certainly not getting any more affordable for first-time buyers.
‘‘This is underpinned by some very strong results in the REINZ House Price Index (HPI), which reached a new high and represented the highest annual percentage increase in the New Zealand HPI that we’ve seen since records began,’’ she said. ‘‘Looking at the overall picture, we’re still seeing that the lack of total housing supply is continuing to push up house prices. In May, there were less than 15,000 properties available for sale across the country.
‘‘This is the second-lowest level of total inventory we’ve seen since we began collecting records, and properties are still selling relatively quickly for this time of year which is when we usually start to see things slow down a bit.
‘‘While some of the regions are starting to show signs of prices easing, which will be welcome news for locals who are looking to buy, it’s hard to know whether this is a direct result of the March 23 announcements or just the usual winter slow down. This is particularly true given that the Auckland market is still forging ahead, with another record median price seen in May.’’ The Government announced in March that it was removing investors’ ability to offset their home loan interest costs against rental income and extending the bright-line test.
The market has been reaching new heights since the country came out of lockdown last year as low interest rates combined with increasing confidence.
There were 7550 properties sold nationwide in May, which was the highest number of properties sold in a May month for three years.
‘‘Looking forward, we would expect sales volumes to remain relatively stable over the winter months, however, if we don’t get more listings coming onto the market, it could be a very quiet winter indeed,’’ Alexander said.
Infometrics economists said the ‘‘obscene’’ house price rise reflected the lack of stock for sale.
‘‘There is real concern that a dearth of properties for sale will maintain an imbalance between demand and supply, resulting in continued competition for properties despite there being fewer buyers in the market,’’ said chief forecaster Gareth Kiernan.
‘‘Normally strong house price growth draws more sellers into the market, particularly people looking to realise the gains on their investment properties. However, it is possible that the extension of the bright-line test for investors to five years in 2018 is encouraging investors who have subsequently bought property to hold it for longer and not respond to the usual market signals and dynamics.
‘‘Very low interest rates also mean that investors might be reluctant to sell property, faced with a lack of returns available in other investment options.’’
Kiwibank senior economist Jeremy Couchman said that, once seasonally adjusted, sale numbers dropped almost 13 per cent nationwide. At a regional level, sales fell almost universally across the main centres in May, with Gisborne the sole exception, he said.
‘‘Almost all regions have recorded a monthly average fall in sales over the last three months. In comparison, buoyant demand had led sales to strengthen over the six months prior.’’