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Fall in house sale volumes accelerated in March

Friday 12th April 2019

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Housing sales activity slumped 12.9 percent to a 17-month low in March, a month that is usually one of the peak selling months of the year, and annual house price inflation eased to 2.3 percent.

That's an acceleration from the 9.5 percent fall in sales in February, which is also usually a strong month.

Auckland prices, which fell 0.5 percent from February, are no longer the only ones falling, the latest Real Estate Institute figures show.

Prices in Gisborne/Hawke’s Bay fell 0.8 percent in the latest month, prices in Wellington were down 0.4 percent, those in the Tasman/Nelson, Marlborough and the West Coast sank 0.6 percent while prices in Otago eased 0.7 percent.

“At a time when sales volumes are normally very strong and total sales figures for the country are typically well over the 7,000 mark, with 6,938 sales, this was the lowest number of properties sold for the month of March since 2011,” says Bindi Norwell, REINZ chief executive.

The March sales were down from 7,964 in March 2018.

“Despite some extremely competitive mortgage rates on offer from the banks, and the high chance of an OCR (official cash rate) cut in the near future, it appears the legislative changes on the horizon and the difficulty accessing finance are now really starting to impact the housing market,” Norwell says.

“Hopefully, as we gain more certainty over the coming months – particularly in relation to capital gains tax – we’ll start to see volumes pick up. However, winter is normally a quieter time of year so time will tell.”

Annual house price deflation in Auckland is now 2.9 percent, compared to 2 percent in February.

Excluding Auckland, annual house price inflation across the country is 7.2 percent, down from 8.1 percent in February.

Nevertheless, there are still pockets of the country with double-digit house price inflation including Southland, 16.8 percent, Manawatu/Whanganui, 16.7 percent, and Gisborne/Hawke’s Bay, 11.4 percent, with Wellington not far behind at 9.3 percent.

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 4.5 percent in March nationwide from the same month last year.

The discrepancy between that and the index’s 2.3 percent annual increase tends to reflect differences in the types of houses and their prices.

In March, 16.3 percent of houses sold were for prices between $750,000 and $999,999, up from 13.8 percent in March last year and there was a similar increase in sales of houses worth more than $500,000.

Houses price below $500,000 accounted for just 38.5 percent of sales, down from 41.8 percent last year.

Houses sold for more than $1 million also fell to 14.8 percent of the total from 15.5 percent last March.


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