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NZ housing market strengthens in December, led by regions

Wednesday 20th January 2016

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New Zealand's housing market continued to strengthen in December, with several regions hitting new record prices, while Auckland lagged behind following restrictions to curb activity in the country's largest city.

The country's median dwelling price for December was $465,000, 1.2 percent ahead of November and 3.3 percent up on December 2014, the Real Estate Institute of New Zealand said in its monthly release of home sales data. Excluding Auckland, the median price hit a new record of $379,000.

Auckland's property market has showed some signs of slowing after the Reserve Bank and the government last year introduced new measures to quell the risk from a housing bubble, as migrants and investors competed for a shortage of housing stock. While Auckland house prices advanced in the past two months, the latest $770,000 median price is just short of the record $771,000 set in September. Meanwhile, prices outside of Auckland have continued to strengthen, with five areas setting new record median prices in the latest month.

“Regional markets, particularly Northland, Waikato/Bay of Plenty, Hawkes Bay and Central Otago Lakes are now setting the pace for the New Zealand real estate market, with Auckland, in a relative sense, now in the middle of the pack," said REINZ chief executive Colleen Milne.

"In addition to the four regions already noted, Wellington, Manawatu /Wanganui and Otago are also seeing positive movements in days to sell and median prices," she said. "This breadth of the improvement across New Zealand suggests that there is more is at play than just an Auckland ‘halo effect’, although that has contributed in the northern regions.”

Some 7,313 dwellings were sold across New Zealand in December, down 9.1 percent from November although 3.5 percent ahead of December 2014.

In Auckland, the volume of sales dropped 12 percent from November and 19 percent from the year-earlier month. Auckland now accounts for just 51 percent of national auctions, down from 75 percent a year earlier. 

The central bank introduced Auckland-specific lending restrictions covering loan-to-value ratios in November last year, while the government's more stringent enforcement of taxing speculators' capital gains began in October.

"The decline in sales volume in Auckland, while noticeable, is likely transitory as the region gets to grips with the new LVR rules for investors, although the median price continues to firm," Milne said.

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