Auckland house prices dip in July, but sales volumes jump, REINZ says

Thursday 13th August 2015

New Zealand house sales stepped up to an unseasonally high volume in July, although there was a pause in the rocketing upward trend for Auckland house prices, where the median house price fell by 2.6 percent to $735,000, compared to June, according to the latest figures from the Real Estate Institute of New Zealand.

The number of houses sold in July rose 38 percent to 8,121 in July from the same month a year earlier, the highest number for a July month in 10 years, and driven by a 41 percent gain in Auckland, with 3,160 sales, according to the REINZ.

While the median Auckland house price was lower than the previous month - the first drop in the median price since January - it was still about 20 percent higher than a year earlier. The national median average rose 3.3 percent in July to $465,000 for an annual increase of 12 percent.

"The volume of sales has been exceptionally strong for the middle of winter right across New Zealand, with very strong year on year sales growth in the top half of the North Island and Central Otago Lakes in particular," REINZ chief executive Colleen Milne said. "Inventory continues to be a significant problem in Auckland, with less than 10 weeks' supply available, and there is an emerging problem of available properties in Northland and Waikato/Bay of Plenty."

The Auckland property market has been a persistent concern for policymakers as record inbound migration swells the population in the country's biggest city. A lack of building activity in the city, after the collapse of the finance company loans sector last decade, left a shortfall in housing supply when buyers re-emerged after the global financial crisis and local recession. That's pushed up prices to high levels relative to household incomes, something the Reserve Bank sees as a risk to the wider financial system in the event of a sharp downturn.

To soothe the property market, the central bank imposed restrictions on high loan to value ratio mortgage lending in late 2013. Further limitations on lending to Auckland property investors will bite from October, with banks facing pressure from the Reserve Bank to implement the restrictions informally and early.

Stripping out Auckland, the REINZ figures show national sales volumes rose 36 percent in July from a year earlier, while the median price increased just 6 percent to $352,000

Sales turnover in Wellington rose 12 percent to 697 in July, compared with July last year, for a 4.1 percent increase in the median sales price to $395,750, while Christchurch sales were up 10 percent July on July to 574 for a 5.6 percent increase in median sales price to $430,000. Dunedin reported a 9.2 percent increase in turnover to 155 in July compared to the same month last year, while the median sales price gained 5.8 percent to stand at $285,000.

Just 40 percent of properties sold in July were below $400,000, compared to 47 percent a year earlier, while the $1 million-plus bracket accounted for 11 percent of turnover, up from 6.7 percent in July 2014.

BusinessDesk.co.nz

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