Signs of life are returning to the Auckland housing market, with prices rising across the city for the second month in a row. While prices are still down on a quarterly and annual basis, confidence seems to be returning as the market gets ready for spring. Even though the gains are modest at this stage, they come during winter when the market is normally struggling. House prices are also up across New Zealand on a monthly basis, with quarterly prices down and modest gains recorded for the year.
According to the Real Estate Institute of New Zealand (REINZ) Housing Price Index (HPI), Auckland prices rose by 0.1% in June, after rising by 0.3% in May. While this growth is significant, prices were still down by 0.8% over the quarter thanks to weak results in April. As you might expect, the HPI was also down considerably compared to June last year at -3.5%. Overall, Auckland house prices are up 7.2% over five years, but 4.3% lower than their peak.
According to the REINZ chief executive Bindi Norwell, these results are "interesting" because they come at a time when the market is traditionally subdued: "While the annual figure shows a fall of 3.5% in the value of the Auckland property market, the last two months have shown an uplift of 0.3% from April to May and 0.1% from May to June... While it's too early to call this a trend, it is certainly the first signs of some renewed confidence returning to the market."
When New Zealand is analysed as a whole, the HPI increased by 0.3% over the month, but was down 0.8% over the quarter. Unlike Auckland, national results are still up on an annual basis at 1.7% in the 12 months ending June. These figures change considerably when Auckland is left out of the equation, with the monthly HPI up by 0.4% in June, up 6.5% over the year, and up 8.9% over five years. The national market excluding Auckland is currently at its peak.
Despite subdued conditions in some markets, records are still being set in others. Waikato, Manawatu/Whanganui, Otago, and Southland all recorded fresh highs in June, with Southland up a massive 20.2% over the year and Otago up 12.2% over five years. In fact, 11 out of 12 New Zealand regions saw an annual increase in the HPI, with Auckland the only market left out. The HPI is developed by the REINZ in collaboration with the Reserve Bank, with prices measured relative to a range of other attributes such as the land size, floor area, and number of bedrooms.
When median house prices are analysed instead of HPI figures, prices across New Zealand increased by 4.5% over the year to $585,000, which is up from $560,000 in June 2018. According to ASB economist Mike Jones, we can expect a further 5-6% national growth by mid-2020: "Today's data leaves us comfortable with our expectation for a mild pick-up in the nationwide housing market over coming months." While house sales have been struggling in New Zealand of late, according to the REINZ, national sales rose by 3% and Auckland sales jumped a massive 13.6% in June compared to May.
