New data from the Real Estate Institute of New Zealand shows sales volumes for July were up on the year before. In fact they were the highest July figures since 2016.
Does that mean the market is picking up again, especially in Auckland, where prices have been flat for the last two years and sales volumes have been decreasing?
Many of the headlines when it comes to housing market in New Zealand tend to focus on prices – are they up or are they down?
The REINZ figures released this week do show some price movements outside of Auckland – the national median price, excluding Auckland, was up 6.5 per cent to $485,000 – but in a changing market the stat to watch, according to the experts, is the number of sales.
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National sales volumes rose 3.7 percent year on year to 6118 while in Auckland volumes were up 6.6 percent to 1894.
“This has gradually been getting stronger over the past three months,” says Bindi Norwell, REINZ chief executive. “This is the first time in eight months we’ve seen increase on an annual basis, suggesting that we’re starting to see some early signs of growth.”
The clue is in the inventory of properties available for sale, up by 555 properties or 2.6 percent to 21,843 nationwide. Importantly, new listings make up one third of that inventory nationally, slightly less in Auckland (29 percent): that’s slightly less than this time last year, but Norwell says it shows vendors are coming around to the “new normal.”
“[Listings] are not necessarily stale properties that have sat for a longer, but price expectations are now meeting the new normal in the market,” she says. “We had this standoff with vendors holding off, but now they are understanding that they need to meet the market.”
She points to a slight decrease in the number of days to sell a property – 40 days in July compared to 41 in June. However, those days to sell are still more than July last year, particularly in Auckland (up to 44 days from 41) and Northland (now at 60 days, compared to 49 last year). On the West Coast region ,days to sell are out to 90 days.
The slower to sell properties are in the higher price brackets: properties in the $300-399,000 bracket selling in 34 days, compared to 42 days for places over $600,000 – although they are all moving faster than January and February this year, when days to sell stretched out to 51 or more.
But a harbinger of shifts in the market is the drop in properties selling below $500,000, the typical first home buyer bracket. That share dropped to under 40 percent in July (from 42.4 percent last July). Norwell says that’s due to fewer properties available at that price point at the moment.
“But prices are coming down, as we’re building more in that price bracket. Apartments, for example, were only nine percent of the pool three years ago, and that’s up to 12 percent now in Auckland. “
In Wellington, REINZ regional director Mark Coffey says that the region had an uptick in sales in the mid-price bracket ($750,000 to $1 million), pushing growth in median prices to 14.5 percent. Volumes were up just under three percent, and total inventory the highest July figure for three years.
“Anecdotally, we are still seeing homes in areas close to schools, public transport and amenities selling with multiple offers,” he says. “We have seen very little activity on the investment side of the market, but more investors are starting to dip their feet due to the lack of rentals available.”
Norwell says that investors are starting to appear in the Christchurch again, with slightly fewer first home buyers. She observes that vendors are still a little slow to align with the market value, but are getting fair market prices, which may explain days to sell going out to 45 days compared to the July ten-year average of 35 days. Sales volumes up 14.6 percent on July last year.
“I do feel that now vendors are meeting price expectations, that there’s a renewed confidence coming into the market,” Norwell says. “It’s all cyclical, and now we have a bit of movement, things are going ahead. With low interest rates, and August’s surprise 50 basis points drop in the OCR, going forward we expect to see even more signs of growth.”
