The New Zealand housing market may be down - but it's certainly not out. The number of property sales across the country rose in January for the first time in one and a half years according to figures from the Real Estate Institute of New Zealand (REINZ). Despite news of dropping prices and low levels of activity, 11 out of 16 regions experienced sales increases when compared to the same time last year. While house prices are holding without making much new ground and regulators remain rightfully concerned about risks to financial stability, it looks like there's a lot of life left in the property market yet.
A total of 4,366 properties were sold across New Zealand in January, an increase of 2.7 percent from January 2017. While conditions in Auckland were much more subdued at 1,157 sales and a 0.9 percent increase, even this was more than some commentators were expecting. All in all, 11 out of 16 regions experienced an increase in property sales when compared to the same time last year. Nelson saw a huge increase with 78 properties sold compared to 61 in January last year, with Canterbury sales also jumping significantly from 514 to 607 over the same time period.
The median number of days it took to sell a property also increased across the country, however, with this statistic often used as a measure of underlying demand. On a national basis, the number of days people had to wait for a sale increased from 41 days to 46 days in the year ending January 2018. While seasonal factors should be taken into account, this is the highest median number of days it's taken to sell a property since February 2012. According to REINZ chief executive Bindi Norwell, "January can often be a quiet month for the industry as people spend much of their time at the beach. However, clearly the warmer weather has helped sales."
While the property market is definitely slowing thanks to cooler conditions in Auckland, house prices are still growing at a healthy rate in other parts of the country. According to Norwell, "House prices across the country continue to hold up with 14 out of 16 regions experiencing a year-on-year price increase. Otago's record price for January was driven by a strong increase in Clutha and the Central Otago District – up 53.4 per cent and 39.4 per cent respectively." Tighter lending criteria and restrictions on highly-leveraged mortgages by the Reserve Bank has made it difficult for some borrowers, although most of the country has not slowed down as much as Auckland. This could be partly due to new government policies that restrict foreign investors from buying property, with foreign activity much higher in Auckland.
The REINZ house price index - which considers the mix and value of properties sold - increased 3.4 percent on an annual basis to 2,655 in January, with Auckland's house price index increasing just 0.1 percent over the same time period. When Auckland's results are excluded, the New Zealand house price index was up a healthy 6.6 percent over the course of the year. Six regions reached all-time highs in January data according to REINZ - Northland, Waikato, Bay of Plenty, Manawatu/Wanganui, Otago, and Southland. The median New Zealand sale price increased by 7.1 percent to $520,000 in January compared to a year earlier at $485,000, with Auckland's median sale price decreasing by 1.2 percent to $820,000, down from $830,000.
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