Tuesday 14 February 2017 10:55 AM
NZ house prices advance in January, sales activity slows
By Tina Morrison
Feb. 14 (BusinessDesk) - New Zealand's median house price rose 9.4 percent in January, with two regions recording new records, although activity slowed, according to the Real Estate Institute.
The national median house price increased to $490,000 in January from $448,000 a year earlier, the institute said. The price declined 5 percent from the December median level of $516,000, which the institute said was in line with typical patterns for quieter holiday trading. There were 4,307 sales in January, lower than the 6,533 sales in December and 5,048 in January last year.
Record migration and low interest rates have bolstered the country's housing market, prompting the central bank to tighten up lending rules to reduce the risk to the nation's financial stability. New restrictions on lending to property investors with high loan-to-value ratios came into play in October last year, taking some of the heat out of the market.
In Auckland, the country's largest city, rising house prices have made purchasing property unaffordable for many. In January, the median Auckland house price increased 12 percent to $805,000 from a year earlier, although it was 5 percent weaker than December. After months of record low numbers of houses available for sale across Auckland, the number of properties available jumped 17 percent to 1,135 from the year earlier, and sales volumes fell 18 percent to 1,247.
"Sales activity was weak across many regions in New Zealand, with Auckland sales activity particularly soft," said ASB economist Kim Mundy. "Soft demand, associated with the investor-focused loan-to-value ratio restrictions (LVRs), is slowing sales and also weighing on house price growth. We expect to see activity remain subdued over 2017, especially in Auckland where prices are most stretched."
The number of homes sold for more than $1 million in January rose by 8 percent to 456 from a year earlier to make up 11 percent of all sales. Those sold for less than $400,000 dropped 26 percent to 1,611 to make up 37 percent of all sales.
Nelson/Marlborough recorded the biggest annual gain, with the median price up 25 percent to a record $470,000, and Hawke's Bay also hit a new record, up 16 percent to $366,000. Big gains were also felt in Waikato/Bay of Plenty which jumped 22 percent to $462,000, while Manawatu/Wanganui increased 21 percent to $265,000.
Elsewhere, Northland's median price increased 18 percent to $399,500, Taranaki advanced 4.8 percent to $351,000, Wellington gained 17 percent to $460,000, Central Otago Lakes jumped 20 percent to $630,000, Otago advanced 8.6 percent to $304,000 and Southland increased 17 percent to $217,000.
Canterbury/Westland bucked the trend, with the median price slipping 1.6 percent to $418,000.