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08 Aug 2014

Housing Market Prices in July

The New Zealand property market continues to stabilise after easing for much of 2014.  While new signs of growth were recorded in some quarters and house prices are still 8.1 percent higher than a year ago, national median prices were down 2.6 percent in July on a monthly basis.  Median monthly selling prices were down in Wellington and Christchurch, with Auckland continuing to show growth and mixed results recorded for sales volumes and days to sell.

According to the latest housing sales figures from the Real Estate Institute of New Zealand (REINZ), the median price for New Zealand homes sold in July was $416,000, down 2.6 percent from June.  Conditions were far from even around the country, however, with the overheated Auckland region recording a median price of $610,000, $10,000 higher than the month before and 10.5 percent higher than last year.  Taranaki, Otago, and Southland also bucked the national trend by recording monthly price gains in July.

The rest of New Zealand didn't fare so well, however, with prices in Wellington and Christchurch both down over the month.  The median house price was $380,000 in Wellington, down 1.3 percent for the month.  House prices in Christchurch were down 5.4 percent to $407,250, a significant decrease which saw annual growth drop to 4.4 percent.  The disparity between price growth in Auckland and the rest of New Zealand has led to mixed analysis, with Westpac interpreting new signs of life in the REINZ data and ASB suggesting stabilisation.

"Both we and the Reserve Bank have been expecting an upturn in the housing market over the second half of this year," said Westpac senior economist Michael Gordon, adding "Net immigration is approaching record highs, banks are utilising more of the high-LVR loan limit, and some popular mortgage rates are actually lower now than they were before the first OCR hike in March...  The July figures are consistent with that view, but at this stage it's too soon to tell whether the upturn will resemble our modest expectation (with annual house price growth slowing to 4.5% by year end) or the RBNZ's more bullish view (with prices re-accelerating to 6.5% a year)."

ASB senior economist Chris Tennent-Brown was not quite as positive, however, saying the latest data represents stability after a period of easing rather than a pause for new growth:  "Overall, we think the data over the last couple of months suggest sales activity has stabilised at a lower level than late last year, rather than being poised to re-accelerate...  House price growth is likely to be slower than the RBNZ expected in its June Monetary Policy Statement."

REINZ data for sales volumes and days to sell were also mixed, with 5,893 house sales in July, up 2.3 percent over the month but down 13 percent over the year.  While the number of days needed to sell a property declined from 39 in June to 37 in July, it was still more than the 35 days recorded in July last year.  According to REINZ chief executive Helen O'Sullivan, "Sales volumes picked up a little in July compared to last month but this is about in line with the normal seasonal pattern...  Rising interest rates and the forthcoming election are probably also influencing buyer behaviour."