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December house sales fall to seven-year low

Thursday 17th January 2019

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The final month of the year saw the lowest number of residential properties sold in a December month in seven years, according to the latest data from the Real Estate Institute of New Zealand.

The number of houses sold across the country in December fell to 5,330, 12.9 percent fewer than a year earlier. In Auckland alone, the number of properties sold fell 24.3 percent on the same month previous year, the lowest in a decade.

“While December is usually a quiet month as people focus on Christmas holidays, December 2018 was extremely quiet,' said Bindi Norwell, REINZ chief executive. 

Jeremy Couchman, Kiwibank senior economist, said the drop was "eyewatering" and felt around the country. He doesn't, however, think the New Zealand housing market is in line for a correction.

"We still have a massive shortage of housing, low mortgage rates, and an unemployment rate at 3.9 percent," he said.

The December weakness may also reflect some distortion ahead of the Jan. 1 loosening of the loan-to-value ratio by the central bank, he said. The LVRs were imposed in 2013 to help cool the housing market and have been gradually loosened.

In November, the RBNZ said it would allow banks to increase their lending to borrowers with less than a 20 percent deposit to up to 20 percent of total new mortgage lending, up from 15 percent previously. 

The REINZ House Price Index for New Zealand, which measures the changing value of property in the market, increased 3.3 percent year-on-year to 2,740. Excluding Auckland, it lifted 8 percent to a new record high of 2,672. The Auckland house price index fell 1.7 percent on the year to 2,822. 

The national median price increased 1.5 percent to $560,000 in December. Excluding Auckland, the median price increased by 6.4 percent to $480,000.

The median number of days to complete a sale increased to 35, up by three days from December 2017.  

Auctions were used in 11 percent of all sales across the country in December, with 584 properties selling under the hammer – the lowest percentage for auctions in 11 months. In December 2017, 836 properties, or 13.7 percent, were sold by auction.

Meanwhile, the number of properties available for sale fell 1.8 percent on the year to 24,158. Gisborne's five weeks of inventory was the lowest nationwide and the lowest ever, followed by Wellington with only six weeks' inventory – the lowest since October 2016.

“Inventory levels are a real concern at the moment for the industry, particularly with Gisborne having the lowest level of inventory any region has ever had since REINZ began keeping inventory records back in January 2007. In December, Gisborne only had 83 properties available for sale. If no new listings came onto the market in January, in roughly five weeks’ time there will be no properties for sale at all which will further drive up prices in the area,” said Norwell.

The number of homes that sold for less than $500,000 across New Zealand fell to 41.5 percent of the market in December versus 43.5 percent a year earlier. The number of properties sold in the  $500,000 to $750,000 bracket increased to 29.9 percent from 28.3 percent. At the top end of the market, properties sold for more than $1 million decreased to 12.9 percent from 13.9 percent.  


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