Tuesday 14th May 2019
|Text too small?|
The decline in Auckland house prices is starting to accelerate as the number of house sales plummet, not just in Auckland but in most parts of the country.
The latest Real Estate Institute data shows prices fell 2.1 percent in Auckland in April from March and are down 4.4 percent from April last year.
That dragged the national house price inflation rate down to 1.3 percent last month from 2.3 percent in March. House price inflation excluding Auckland eased to 6.7 percent in April from 7.2 percent the month before.
Sales volumes in Auckland fell 16.3 percent compared with April last year, the lowest April figure in 11 years. That dragged the national decline down to 11.5 percent, or 5,800 dwellings, which REINZ says is the lowest level of sales in April for five years.
But Jeremy Couchman, an economist at Kiwibank, says the government’s decision to abandon a capital gains tax and the Reserve Bank’s cut in the official cash rate last week to 1.5 percent from 1.75 percent “should help provide a floor under the market.”
The timing of Easter and Anzac Day may have also played a role in April’s weakness, he says.
“The current state of affairs in the housing market still does not suggest we are in for a sharp correction,” Couchman says.
“Fundamentally, the economy is in reasonable health and we have a robust labour market – the unemployment rate is at 4.2 percent.”
The scrapping of a capital gains tax - CGT - and the OCR cut “removes a pillar of uncertainty for property investors and may encourage some to dip their toes back into the market,” he says.
He doesn’t think the Reserve Bank is done cutting either, particularly if the housing market weakens any further.
“If house prices don’t respond, household spending may suffer,” he says.
“The RBNZ is likely to take a close look at macro-prudential policy settings and potentially loosening them further. Investor-related lending is particularly soft.”
The REINZ data showed sales volumes fell 25.5 percent in the Bay of Plenty, 12.8 percent in Nelson, Marlborough and Tasman and 11.9 percent in Wellington. Prices fell 1.7 percent in Bay of Plenty for an annual increase of 6.6 percent, but prices in Wellington continue to climb, up 0.3 percent in the month for a 9.6 percent annual increase.
The median number of days it took to sell an Auckland house also crept up by four days to 41. Sales in the rest of the country excluding Auckland took one day more at 36.
CoreLogic says the REINZ numbers include only those sales involving an agent – it estimates other sales will bring the total for April up to about 6,600 once all sales are processed by local councils.
“Month-to-month, up to 20 percent of all residential sales are completed without an agent involved – at the moment, however, it’s only about 12 percent.
Sales volumes compared with April last year fell in most districts with the exceptions of Gisborne, up 9.7 percent, Hawke’s Bay, up 5.4 percent, and the West Coast, up 2.7 percent.
House price inflation in Gisborne and Hawke’s Bay is still in double digits, up 11.2 percent on April last year.
The West Coast price figure is lumped in Tasman, Nelson and Marlborough which together saw an 8.4 percent increase in house price inflation.
The house price index was developed by the Reserve Bank to smooth out greater or fewer numbers of cheap or expensive houses being sold in any month and to take into account the size of houses being sold to reach like-for-like numbers.
But REINZ continues to headline its own median house prices, which rose 6.4 percent in April nationwide from the same month last year, with the median price in Auckland flat.
On the basis of those numbers, REINZ chief executive Bindi Norwell says Auckland “seems to be in a Groundhog Day situation with the median price for the region being around the $850,000 mark for three years. It will be interesting to see if last week’s OCR cut, as well as certainty on CGT, will impact the market in the coming months.”
The discrepancy between that and the index’s 1.3 percent annual increase reflects differences in the types of houses sold and their prices.
In April, only 38.7 percent of houses sold for less than $500,000, down from 43.1 percent in April last year, while nearly 32 percent of sales were priced between $500,000 and $749,999, up from 28.1 percent.
Houses sold for prices between $750,000 and $999,999 accounted for 15.5 percent of the total sales, up from 14.9 percent, while those sold for more than $1 million were steady at 14 percent.
No comments yet
NZ dollar falls against Aussie after jobs data there
Sky CEO put on notice by chunky vote against salary share scheme
Unions gearing up to oppose 'market tests' on Fair Pay Agreements
Mandatory farm plans scorned as 'tick box' exercises
Kiwi dollar firms on weak US retail data, capped by rate-cut expectations
17th October 2019 Morning Report
SkyCity hoses down union claims over potential job losses
OPINION: Fair Payment Agreements and 'swallowing vomit' - the lot of the CTU
MARKET CLOSE: NZ shares gain; Restaurant Brands climbs on upbeat outlook
NZ dollar stalls after Bascand's rate cut comments