Housing market shrugs off warnings
Housing market shrugs off warnings
The New Zealand Median Dwelling Price hit an unprecedented high of $300,000, up 54% on the same quarter in 2002, shrugging off attempts by the Reserve Bank to dampen the housing market. The figures were released today in the AMP Home Affordability Report for the December 2005 quarter.
Graham Crews, Senior Lecturer in Real Estate at Massey University, says .The national median dwelling price has climbed steadily every year since 2002, while total annual sales have consistently reached over 100,000. These figures reflect a market that has been operating at the top of its cycle for the last four years, despite predictions from the Reserve Bank that it will soften.
.The housing market is shrugging off warnings by the Reserve Bank, which has attempted to dampen demand by increasing the Official Cash Rate nine times in the last two years,. he says. Increasing house prices, rather than interest rates, remained the principal driver of declining home affordability.
The New Zealand median dwelling price lifted 3.4% during the quarter, contributing to the Home Affordability Index declining 4.8%, a trend now sustained for seven consecutive quarters. Despite increasing dwelling prices and declining affordability during the December quarter, residential sales of 27,056 were 5.9% up on the same period last year (25,547).
David Chote, General Manager of Distribution at AMP says .Nobody could have predicted that the market would remain so good for so long. The fact that it has is a reflection of a strong domestic economy, a low unemployment rate and an unrelenting Kiwi dream to own the place you call home.
.For first-home buyers though, affordability is no longer just an issue in the major centres. The median dwelling prices in the provinces have climbed as these markets have played catch-up with the rest of the country. Manawatu/Wanganui has lifted over 25% in the past year alone,. he says. Nine of the twelve regions recorded a rise in median dwelling prices and ten reported a quarterly decline in home affordability. Two South Island regions led the field with Otago recording the steepest decline at 17.8%, followed by Central Otago Lakes (15%), Manawatu/Wanganui (10%), Waikato/Bay of Plenty/Gisborne (8.6%), Hawke.s Bay (6%), Canterbury/Westland (5.9%), Auckland (3.9%), Nelson/Marlborough (3.8%), Northland (3.4%) and Wellington (3.2%). In contrast, two regions, Southland and Taranaki, recorded a quarterly improvement in affordability at 4.3% and 2.5% respectively. Both regions joined Nelson/Marlborough in recording a quarterly fall in median dwelling prices. On a yearly basis, the New Zealand index reflected a twelve-monthly decline in home affordability (16.3%), for the fourteenth consecutive quarter. Reported residential sales for the past year were 105,981, 1.3% down on the previous year.s (Dec 04/Nov 05) sales of 107,335. The median dwelling price moved up 15.4% from $260,00 to $300,000.
All regions, except Nelson/Marlborough, reported an increase in median dwelling prices over the past year. Manawatu/Wanganui recorded the steepest lift at 25.5%, followed by Canterbury/Westland at 20% and Waikato/Bay of Plenty/Gisborne at 19.6%. Nelson/Marlborough reported a fall of 6.8% in the median dwelling price over the year.
AMP Home Affordability Report
The quarterly report is prepared for AMP by Massey University.s Real Estate Analysis Unit. It combines data on housing prices, mortgage interest rates and average weekly earnings to produce a home mortgage affordability index indicator. The survey, conducted since 1988, uses data supplied from Statistics New Zealand, the Reserve Bank and the Real Estate Institute of New Zealand.