Median house prices fell sharply in June with Auckland prices leading the decline

Median house prices fell sharply in June with Auckland prices leading the decline
The fall in Wellington prices was particularly acute in June.

Median house prices and sales volumes were sharply down in June, with Auckland leading the decline.

The Real Estate Institute of NZ said the national median selling price was $427,250 in June, down 0.6% on May but still up 8.4% on June last year.

But prices declined  more sharply in the Auckland region, where the median declined 4% to $600,000 in June, compared to with $625,000 in May.

The biggest decline was in central Auckland (within the boundaries of the former Auckland City Council) where the median fell 7.5% to $655,750 from $709,000 in May.

Median prices dropped throughout the region and were down by -6.5% in Rodney, -0.3% on the North Shore, -4% in Waitakere, and -3.5% in Manukau. 

In the Wellington region the median price fell 6.7% to $385,000, with median prices in Northern, Eastern and Southern Wellington and Pukerua Bay/Tawa all posting double digit declines, while prices in Upper Hutt were down 9% and in Lower Hutt they declined by 5.5%.

In Christchurch the median price declined by 1.3% to $430,000 from $435,500 in May but the biggest falls were in provincial Canterbury with the median price in South Canterbury dropping by 21%, Rangiora was down by 15.8% and North Canterbury declined by 13.2% and mid-Canterbury was down 11.1%.

The volume of properties sold was also down on a month by month and annual basis, with 5,763 homes selling in June, down 12.3% compared with May and 6.1% compared with June last year.

REINZ chief executive Helen O'Sullivan said the volume of properties being sold had been declining for several months and in some regions sales had fallen by around 20%.

"At the same time it is now taking five days longer to sell a property than it did 12 months ago," O'Sullivan said.

Around the country - REINZ median selling prices in June

  June 2014 May 2014
     
Northland $295,000 $325,000
Rodney 580,000 620,000
North Shore 747,000 749,000
Waitakere 525,000 547,500
Auckland Central 655,750 709,000
Manukau 560,000 580,500
Hamilton 354,000 366,500
Tauranga 405,000 355,000
Mt Maunganui/Papamoa 420,000 461,000
Rotorua 235,000 242,500
Taupo 332,500 364,000
Gisborne 233,500 230,500
Napier 325,000 331,500
Hastings 269,750 273,000
New Plymouth 346,000 310,000
Palmerston North 270,500 299,000
Wanganui 151,000 120,000
Levin 175,000 190,000
Upper Hutt 305,000 335,000
Lower Hutt 360,000 381,000
Northern Wellington 459,000 551,000
Central Wellington 452,000 442,500
Western Wellington 575,000 560,000
Southern Wellington 464,250 540,000
Pukerua Bay/Tawa 361,000 405,000
     
Nelson City 375,000 358,500
Christchurch 430,000 435,500
Rangiora 400,000 475,000
Timaru 284,000 297,263
West Coast 180,000 220,000
Queenstown 645,000 598,000
Dunedin 260,000 270,000
Invercargill 171,250 176,500

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Maybe, it was just a month with a small and biased sample.

REINZ's 4% decline in median Auckland prices is consistent with Barfoot's 2.9% decline in median prices. The tides have turned...

So were more lower priced homes selling? Are FHBs returning to the market early? Or how about some more data?

Over the last two months Decile 3, 4 and 5 houses have had an increased share of total sales at the expense of Deciles 7-10. That said, the latter decile's sales still have higher percentages of the total than they would if sales were balanced across deciles.
 
Quoted REINZ Median prices are still displaced approximately $20,000 higher than the true median.
 
Decile average prices have stopped rising and are now flat.

Thanks that good to know Colin.
I guess over time, I am expecting to see misleading media headlines implying 'prices are dropping' as the LVR restriction 'effect' wears off on the lower end of the market, even as actual house prices are not changing much, reversing much of the recent effect of rising median prices due to less FHB sales....

I suspect LVR limits are having as much - or even more - impact on Deciles 7-9 than Deciles 3-5.

Really? Who buys a million $ house with only 20% deposit (or less)? Thats just nuts.
I would have thought LVRs wouldn't have any effect on the higher end, (once you buy your second home, equity has built up in your first home) it's the FHB and highly leveraged investors that would have been temporarily kicked out of the market until they can come up with bigger deposits... I wouldnt have expected them back into the market in numbers for at least 12-24 months....

Only Decile 10 has an average over $1 million ($1,050,000). Decile 7's average is $510,000, Decile 8 is $576,000 and Decile 9 $676,000.
 
If you are speculating and going for capital gains then I would expect you to a) go for as much leverage as you are allowed and b) buy in the deciles that are appreciating the most (7-10).
 
The percentages of total sales contributed by each decile are almost identical for March 2013 (pre LVR) and March 2014 (post LVR).  Changing a little since March as I indicated earlier.

I have to say despite having pre-approval to buy I haven't been to any open homes for the past few weeks. The weather is too miserable to bother going out in! Looking forward to Spring...

Townie!

It's been the driest and warmest July that I know of.

Spring is when things get cold, windy and wet, as the daylight hours lengthen and the southern oceans and wind patterns warm up enough to start sucking northwards!

You have got to be kidding. It is mid July and I have had a grand total of 3 small frosts and generally its warm enough to do gardening without feeling cold. 
regards

It's winter, so part of it is seasonal as it is every year ( houses that didn't sell during the summer sell out at a lower price when winter hits ) Plus the average price had been skewed upwards by the LVR restrictions, where people had been selling only more expensive houses. A more realistic figure will be painted once more FHB'ers start buying again bringing the average price back down.

really? Happens every winter?
July 2013

  • "6,135 houses sold in June 2013, equal to the number sold in June 2012
  • New median high price in Canterbury/Westland
  • New National Stratified Index highs for Auckland, Christchurch and Other South Island
  • 1,203 houses sold by auction, representing 20% of all sales in June.
  • Market continues to experience significant shortages of listings"

July 2012

  • "Sales up 17.3 per cent year on year 
  • New record median price of  $372,000
  • House prices up 3.3 per cent in 12 months to June"

 

'Bout bloody time , but given we a few thousand newcomers arriving every month its only a matter of time before the relentless march upwards starts again

The REINZ numbers support what I've witnessed at recent auctions where generally speaking the bidding has slowed and the number of people present has dropped. 
 
I think it will be interesting to see what happens in Spring when we typically see an increase in listings.  If demand also increases inline with the new listings then the market may continue as usual.  However if demand stays subdued while listings increase then we could see a further correction.
 
Predictions is more your area of expertise BigDaddy.  What do you think will happen come Spring?

Another slant from todays Herald which sheds a diiffernt light :
 
"The number of sales below $400,000 fell by 17 per cent in June, from a year earlier, following a 25 per cent annual drop recorded in May, which the REINZ said may be a reflection of the LVR restrictions. Sales of properties with a price tag of more than $1 million rose 19 per cent in the year, to make up 7 per cent of all sales in June, while sales between $600,000 and $999,999 rose 6.5 per cent in the year to make up 20 per cent of sales. Houses in the $400,000 to $599,999 price range rose 2.3 per cent compared to a year earlier to make up 28 per cent of total sales"

It's a while since I learnt this stuff at school so please excuse if I stuff it up. Wouldn't the figures youquote, all other things being equal, mean that the median house price would move up, the fact that it's down would indicate a real shift downwards in prices?

Bank of China  pulling funding lines to give the appearence of a softening market so as to reduce 'housing as election issue' effect  back prior to re-election of National Government is as good an explaination as any.

Plan B, has the Bank of China changed their offshore lending criteria within the last 6 months?

Somehow i don't think the BoC is going to drive it's currency policy to suit John Key.  Nonetheless there is allegedly quite a pullback going on.
 
http://www.ft.com/cms/s/0/806ae9b2-08ad-11e4-9afc-00144feab7de.html#axzz...
http://qz.com/233252/xi-jinpings-corruption-purge-is-pitting-chinas-stat...

Quite a jump upwards for Tauranga, which would seem to indicate the bottom end of the market has nosedived. Certainly the feeling I've got from going to lots of empty open home days, where its only me on the register. 

aside from forecaste migrant growth, every other indicator seems pretty gloomy to me..interest rate rises, dropping milk powder, sick log market, stagnant wages, exporters struggling with the $....debt crisis Auckland faces.  Good luck if you can see anything to hold up these Auckland prices.........

Also note that mortgage approvals reported by Reserve Bank in the last 4 weeks are 13.8% down on the same period last year and 22.3% down on the same period during 2012 in fact they are now not far above the approval figures seen in the recessionary period. 

Why would you borrow money with a number that starts with a 6? 
And threats of 7 looming.  
Thats expensive money.  

I thought there was a housing shortage. 
If there is a shortage, then you would think that the figures would be getting stronger not weaker .
It wouldn't surprise me in the least if we end up with thousands of new built empty houses that no body wants, no body can afford, and no body will rent.
Think about it.
As interest rates rise, potential first home buyers will not buy,  because not only will houses be too dear, but paying the mortgage with higher interest rates will be to hard. 
And as rents gently increase the squeeze from both sides could end up with hectares of empty subdivisions, half built houses and bankrupt builders.

That's a scary thought BigDaddy.
I think a correction would be good, but a crash would be bad.
Looking at the above numbers 'Auckland Central' dropped from $709,000 to $655,750. 
That's a fall of $53,250 in one month.  To put that in media terms - thats losing over $1700 a day.
If this type of fall continues over a few months....ouch!

When you start narrowing it down to one part of one region over one month, the small sample means the numbers jump around allot.
Auckland City was 600K in Jan, 750K in March.  That means the median homeowner in auckland city made $2500/day!  yeah right.

I agree. 
I was applying the media spin they use when the news is positive.  However they don't appear to use the same day to day numbers when the situation turns negative.
I notice todays Herald had little to say about the REINZ data...
 

What happened to the stratified mean ?

The stratified median for Auckland:

  • 1 month     + 1.6%
  • 3 months    + 0.4%
  • 12 months  + 6.5%
  • 5 yr CAGR  + 8.1%
  • from peak   - 1.6%

and for NZ:

  • 1 month      - 0.3%
  • 3 months    - 1.3%
  • 12 months  + 6.2%
  • 5 yr CAGR + 4.8%
  • from peak   - 1.5%