A two tier property market is emerging in New Zealand, with prices outside of Auckland rising much faster than in the city, the latest real estate index data suggests.
Prices in Auckland increase by 2.5% year on year in June but elsewhere prices were up by 11.4%, according to the report from the Real Estate Institute of New Zealand (REINZ).
Prices in Auckland reached a median price of $850,500, up from $830,000 in June 2016, and the national median, excluding Auckland, increased to $431,000, up from $387,000.
Most regions recorded double digit growth and record median prices were seen in Bay of Plenty at $555,000, in Manawatu/Wanganui at $280,000 and in Tasman at $581,000. And month on month prices actually fell in Auckland by 0.8%.
According to Bindi Norwell, REINZ chief executive officer, this highlights the buoyancy across the rest of the country and the normal property cycle where regions are typically behind Auckland in terms of the growth curve.
Norwell pointed out that while median prices in Auckland have increased slightly year on year, the city sae its second lowest rate of growth in comparison to the 8% recorded in June 2016 and 27.1% in June 2015.
The index report also shows that sales across the country have continued to decline, down 33.2% in Auckland in the year to June and nationally down by 24.7% for the same period. But Tasman saw a rise of 25% and the West Coast a rise of 3% year on year.
‘We know that it’s winter and the election is just two months away now which typically impacts the number of properties sold in the market. The number of properties sold across the country is the lowest we’ve seen in the month of June for three years now, particularly in the $500,000 and under property price bracket,’ Norwell said.
‘This slowdown in transactional activity, but stabilising price trend highlights the underlying dynamics between housing demand and housing supply, with population growth continuing to rise faster than building consents and dwelling supply,’ she explained.
The index also shows that the number of properties for sale in the Auckland region was up by 57%, providing more choice to buyers. However, excluding Auckland, the number of properties for sale fell by 7.4% and compared to June 2016 the number of listings rose 4.4% in Canterbury, 5% in Wellington and 4.5% in Waikato.
The median number of days to sell a property nationally increased by five days from 31 to 36 days in comparison to June 2016. Regionally, Hawke’s Bay again had the shortest number of days to sell at 28, followed by Wellington and Southland, both 31 days, and property on the West Coast took the longest number of days to sell at 128.
‘The June figures show us that a number of things are happening across the residential real estate market. Inventory levels are impacting pricing, LVRs are having a significant impact in terms of buyers’ ability to purchase properties, particularly for first time buyers, and that the major trading banks are being more cautious with their approach to lending particularly their view of how highly leveraged Kiwis are when it comes to properties,’ said Norwell.
‘Talk of a decline in prices may be premature with the seasonally adjusted median price trends still rising across many regions in New Zealand. The Auckland market is the most mature in terms of the property cycle, however, at worst, prices in the Auckland region are steady at present. The data also shows an emerging trend of section sales in Auckland occurring more quickly than dwelling sales, highlighting that demand for sections is still rising in Auckland while demand for dwellings is easing,’ she added.
‘With the looming election, Auckland prices are showing all the signs of stabilising that we would normally expect and we anticipate this being a similar trend over the coming months until the election is over,’ she concluded.