NZ house prices rise to new record as dwindling supply saps turnover
By Paul McBeth
Oct. 11 (BusinessDesk) - New Zealand house prices rose to a record in September as a lack of listings led to fewer sales in the month and longer closing periods, the Real Estate Institute says.
The REINZ house price index climbed 4 percent to 2,742 in September from a year earlier, a new peak for the property market. The institute said higher prices followed a lack of inventory with a dwindling number of listings through the winter months. Sales volumes fell to 5,506 in September, down 3 percent from a year earlier, and the median days to sell increased by two to 36.
"With July’s listings down by 5.4 percent year-on-year and an all-time low level of listings in seven regions, it’s little wonder that September’s sales volumes were so low," REINZ chief executive Bindi Norwell said. "There simply weren’t as many properties for sale resulting in a very quiet start to spring."
New Zealand's property market has been showing new signs of life as banks loosen their credit criteria, offering loans with smaller deposits as a means to attract first-home buyers. Policy-makers tried to slow down the demand-side of the property market in recent years through the use of loan-to-value ratio restrictions and by banning the sale of residential property to foreign buyers. At the same time the supply-side has been stoked through the government's Kiwibuild programme and the previous administration's use of special housing areas to accelerate consenting processes.
Kiwibank senior economist Jeremy Couchman said the low inventory levels and longer time to sell indicated tightness in the housing market. The lack of supply will tend to provide a price floor as the market consolidates .
Should the Reserve Bank decide to loosen its restrictions on high LVR lending at next month's financial stability report it will only be a modest adjustment.
The national inventory rose to 22,847 in September from 21,727 a year earlier. Of that Auckland accounted for 8,740 listings, up from 7,429 a year earlier.
Norwell said that increase is expected to drive higher sales volumes in October and November.
The national median sale price rose 5.9 percent to $556,000, with record prices in Northland, Gisborne, Manawatu/Whanganui, Hawke's Bay, and Nelson. Auckland prices were flat at $850,000, while Wellington's rose 8.6 percent to $594,500. Canterbury's increased 3.2 percent to $445,500.
Affordable houses of less than $500,000 accounted for 41.4 percent of all sales, down from 46.8 percent in September 2017, while $1 million-plus sales made up 13.6 percent of all sales, compared to 13.4 percent a year earlier.