New Zealand's median house price passes $600,000 for first time: Real Estate Institute

Thursday, 14 November 2019

Median house prices across New Zealand increased by 8.2 per cent year-on-year in October to a new record high of $607,500, the Real Estate Institute says.

It's the first time the median house price for the country has passed the $600,000 mark.

Auckland's median price edged up 0.8 per cent to $868,000, the highest in 19 months. Central Auckland prices rose 4.6 per cent and Franklin 8.8 per cent.

Excluding Auckland, prices were up 8.6 per cent to a record $520,000.

* Biggest city reports biggest price drop as turnover dries up around the country

* Softness in NZ property market seen set to continue**

The house price index, which measures the changing value of property in the market, was up 3.9 per cent from 2018.

Northland, Waikato, Bay of Plenty, Hawke's Bay, Manawatū/Whanganui and Otago all had record median house prices. In Manawatū/Whanganui, the median price was up almost 21 per cent compared to October 2018.

Canterbury returned to a record first seen in October 2018.

'October was a strong month price-wise, with record median prices recorded in six regions and a record equal in Canterbury,' said Real Estate Institute chief executive Bindi Norwell.

'This is the highest number of regional record prices we've seen for the country in 23 months.

'The Gisborne region also had a very strong month with a 37.1 per cent increase in median price year-on-year to $425,000 – the strongest price rise across the country.'

Only Taranaki had a year-on-year price fall, although on a seasonally adjusted basis Auckland prices were down 0.7 per cent.

Andrew Beattie, at Infometrics, said the market was going through a rebalancing.

'As many regions where the median house price is below the national average have seen both sales and prices ticking up. This trend is most prominent for Southland, Gisborne, and Manawatū-Whanganui.'

The number of residential properties sold across New Zealand in October decreased by 4 per cent from the same time last year to 6801.

Bay of Plenty, Tasman and Nelson had the biggest increase in turnover, year-on-year.

Bindi Norwell: 'In Auckland, areas that are more affordable saw big increases in the number of properties sold.'

Marlborough, Gisborne and Taranaki had the steepest falls.

Norwell said that was influenced by people rushing to sell their houses before a foreign buyer ban came into effect in October 2018.

'It's not surprising that the number of properties sold fell when compared to last year. When you add this to the fact that there are around 7800 fewer listings for the first 10 months of 2019 when compared to the same time last year, it's no wonder sales volumes are down.

'Importantly though, what we did see was the lift in the number of properties sold when compared to September. Sales volumes were up 12.1 per cent across the country month-on-month, a pattern we expect to see at this time of the year.

'Looking around the country, the Bay of Plenty saw the highest sales volumes in the month of October for four years with a big uplift in sales in Kawerau, Opotiki and Western Bay of Plenty Districts and in Tauranga City. Similarly, at the top of the South Island, Tasman and Nelson saw strong annual uplifts in sales volumes.

'In Auckland, areas that are more affordable saw big increases in the number of properties sold, with Papakura District seeing a 41.9 per cent increase annually and Franklin and Rodney Districts seeing increases of 25.6 per cent and 13.8 per cent respectively. Whereas more expensive areas such as Auckland City and North Shore City saw falls of -9.2 per cent and -3 per cent respectively,' Norwell said.

'As confidence continues to creep through, it's likely we'll see an uplift again in November, before things quieten down over Christmas and then pick up at the end of January again.'

Kiwibank senior economist Jeremy Couchman said property market activity was likely to continue to gather pace.

'Interest rates remain near historical lows, despite the Reserve Bank keeping the cash rate on hold yesterday. We continue to face supply and demand imbalances. And population growth remains well above average as StatsNZ's latest net migration figures lifted further above 50,000 on an annual basis. We also expect the Reserve Bank to loosen loan-to-value restrictions later this month.'

At ASB, senior economist Mike Jones said the spring lift that had been expected had hit the property market.

'Still, we're not getting too carried away. Talk about the housing 'boom' is overdone. Listings and activity, particularly in Auckland, are still low by historical standards. Various policy-related handbrakes are restraining parts of the market. And let's not forget we are coming from a starting point where valuation and affordability metrics are already stretched by international standards.

'Overall, we're comfortable with our call for nation-wide house price inflation to pick up to 5 per cent to 6 per cent year-on-year by the middle of next year.'