By Bernard Hickey
Figures from the Real Estate Institute of New Zealand and Quotable Value showed only modest sales volumes in September despite the arrival of spring, but the figures also showed prices nudged higher nationally, mainly because of strong price growth in central Auckland suburbs and in Christchurch.
The Real Estate Institute of New Zealand (REINZ) says house sales volumes rose just 43 in September from August to 5,235, representing a "modest result" given the increase normally expected in spring.
REINZ said when adjusted for the seasonal pattern expected in spring, sales are about 2.3% weaker. The national median house price fell by NZ$5,000 to NZ$350,000, or -1.4%, in September compared with August and is flat compared with September last year.
Compared with September 2010, September 2011 house sales volumes rose 912, or 21.1%. See our interactive charts on REINZ house sales volumes.
REINZ said Northland recorded the strongest rise in volumes compared to August (+30.0%), with Otago next, (+12.7%), followed by Manawatu/Wanganui (+12.4%). Wellington saw the largest drop in sales (-9.3%), followed by Taranaki (-7.9%) and Waikato/Bay of Plenty (-6.5%).
"Volumes in the Auckland market were just a 1.5% increase over August, which is relatively flat given the seasonal lift usually apparent at this time of year," REINZ said.
Auckland strongest big city
Hawkes Bay prices rose the most (+8.3%), followed by Auckland (+4.9%), Wellington (+4.1%) and Nelson/Marlborough (+1.9%). Compared to September 2010, Auckland recorded the strongest lift in prices (+5.6%), followed by Canterbury/Westland (+4.7%) and Hawkes Bay (+2.2%). See our interactive charts on REINZ median prices.
“The volume data indicates that the New Zealand real estate market is in better shape when compared with this time last year with volumes up over 20% compared to September last year and a continued reduction in the number of days to sell. That improvement is flattening out with a weaker than usual seasonal lift from August volumes. There is clear evidence from across the country that buyers are very focused on value and are well informed about what they can afford and are prepared to pay,” said REINZ Chief Executive Helen O’Sullivan.
“We’re seeing is a very interesting market with listings improving though still reported as tight, plenty of buyer interest but only on a very rational basis – there is no appetite on the part of buyers to overpay or rush to purchase.”
The national median ‘days to sell’ (measuring the number of days from listing date to unconditional date) improved by 2 days from 39 days in August to 37 days in September and is below 43 in September a year ago.
The REINZ Housing Price Index rose 1.7% in September compared with August. The REINZ Housing Price Index recorded increases in all markets during September, with the strongest rises recorded in Christchurch and Auckland. Compared to September 2010 the REINZ Housing Price Index rose 2.7%, and the Index is now 3.0% below the peak recorded in November 2007.
Figures from Quotable Value (QV) for house values, rather than prices, showed a gradual rise in house prices nationally, although it was also driven by price rises in Auckland and Christchurch.
“Nationwide property values have been gradually increasing for the past six months and are now 0.7 percent above the same time last year and 4.6 percent below the market peak of 2007” said Jonno Ingerson, Research Director QV.co.nz.
“Much of the nationwide increase over the past few months can be attributed to Auckland and to a lesser extent Christchurch. Values across the rest of the country have varied” said Ingerson.
“Values in the Auckland area have increased 3.7 percent since January, and are now 3.4 percent above the same time last year. As a result of these recent increases, values are now 0.6 percent above the previous market peak of late 2007” said Ingerson.
“The old Auckland City continues to have the fastest increasing values within the Super City having increased 5.4 percent since January, and 4.6 percent over the past year. Values are now 2.6 percent higher than the 2007 market peak. North Shore has increased 3.0 percent over the past year, Waitakere 2.3 and Manukau 1.9 percent” said Ingerson.
QV's measure looks at house values rather than house prices and looks at how they have changed in the three months to September over the same period a year earlier. It looks at how the house price sold compared to capital values and works out an index comparing the value to a year ago.
REINZ's figures are a simple measure of house prices sold and median house prices over that period, which means it can be skewed by the type of house sold and the region it is sold.
Here's how QV describes its methodology with a link to frequently asked questions.
The Property Value Growth uses QV’s House Price Index methodology, which generates a residential index for each area by recognising the sales price of each property sold compared to its capital value. This ensures the index provides a measure of change in property values, without fluctuations caused by higher sales volumes in one or more property sectors (e.g. high volumes of apartment sales or investment properties). Residential sales compiled for the previous 3 months are compared to the same period of the previous year to identify the annual percentage change in property value.
ASB Economist Christina Leung said the housing market remained supply-constrained.
Today’s result points to a housing market which is continuing to recover at a very gradual pace. Other housing market reports have also highlighted the continued low level of housing inventory on the market, and it appears this is constraining sales. Nonetheless, the tightness in the housing market is helping to support a recovery in house prices, and we expect further modest price increases over the coming year.
Today’s data have no fresh implications for the RBNZ. While there has been an improvement in household sector conditions in recent months, the continued high level of household debt means that households are likely to remain cautious. With the global outlook continuing to dominate market attention, we expect the RBNZ will leave the OCR on hold until March 2012.
JP Morgan economist Helen Kevans saw house prices rising 3% this year.
Recent signs of stabilization come after a particularly weak 2010, when home values crept lower amid changes to the way property is taxed and weakness in the labour market. We suspect, though, that house prices will rise around 3% in this calendar year, owing mainly to persistent stock shortages. The worsening demand-supply imbalance will continue to put upward pressure on house prices, with gains likely to be dampened only modestly by expectations of higher interest rates, with the RBNZ likely to hike the OCR as soon as conditions stabilize offshore.
See our interactive chart below of the REINZ-RBNZ stratified house price index, which strips out the skewing effects of more houses sold in some price brackets than others.
(Updated with detail, links to full reports, QV details, interactive chart)