House prices have dropped slightly across New Zealand, with Auckland, Wellington, and Hamilton just some of the centres to see a decline in property value. The situation differs widely across the country, however, with some regional areas experiencing record price highs and strong sales volumes. According to figures from the Real Estate Institute of New Zealand (REINZ), sales volumes went up 12.8 percent nationally in April, with some commentators worried about tight Auckland conditions spreading into surrounding regions.
The national median house price reached $490,000 in April, down 1 percent from March but still up 7.7 percent for the year. Median Auckland prices dropped 1 percent to reach $812,000, with Wellington down 0.9 percent to $455,000, and Hamilton down 3 percent to $458,000. The situation could not be more different in regional areas, however, with record prices reached in Waikato/Bay of Plenty, Taranaki, Canterbury/Westland, and Otago. According to REINZ, these differences highlight the growing 'Halo Effect' that happens when people try to escape overheated urban markets.
Despite slowing conditions over the last few months, property values were still up 7.7 percent nation-wide compared to April last year, with Auckland prices up 12.8 percent for the year. Central Otago Lakes recorded the biggest price growth for the year at 25.2 percent, followed by Waikato/Bay of Plenty at 19.1 percent, and Taranaki at 15.1 percent. Taranaki had the biggest price increase compared to March at 8.7 percent, followed by Hawke's Bay with a 4.8 percent increase, and Manawatu/Wanganui with a 2.6 percent increase.
Sales volumes were up across the country on a seasonally adjusted basis, with an 19.6 percent increase over the year and a 12.8 percent increase over the month. According to the REINZ report, "The strong increase in seasonally adjusted sales reflects a smaller decline in sales between March and April than is normally the case." Sales volumes excluding Auckland were up 29.4 percent over the year on a seasonally adjusted basis, with all regions apart from Northland, Auckland and Taranaki showing in excess of 20 percent annual sales growth.
According to REINZ chief executive Colleen Milne, "The April data confirms the continued strength of the real estate market right across New Zealand, driven by a chronic lack of supply," adding that "Anecdotal evidence suggests that investors outside of Auckland are increasingly looking to real estate investments to improve their yields compared to bank deposits." While Auckland City is not leading the New Zealand market like it often does, according to Milne, the entire Auckland region is picking up again after a slow few months:
"The listing situation has tightened again, with the number of weeks of inventory dropping back to 10 weeks - a near-record low. The adjustment period after the LVR is over, and demand remains strong... There's also been a noticeable level of demand from Auckland investors in the Otago region, which highlights the trend of investment interest moving outside Auckland to the regions, as the availability of listings decreases."
Image Source: Andrey_Popov /shutterstock.com