House sale slump eases in October as drop in turnover slows
New Zealand's housing market perked up last month as sales volumes fell at a slower pace, having slumped in the lead-up to the September general election.
A total of 5,689 properties were sold across the country in October versus 6,759 in October a year ago, the Real Estate Institute of New Zealand said. The 16 percent decline from October 2016 compared to a 26 percent year-on-year slump in September. Still, the market remains downbeat, with just two of the 16 regions reporting an increase in sales.
The median number of days it took to sell a property increased to 34 from 32 in October 2016, while the number of auctions, which is generally an indicator of a heated housing market, fell 42 percent on the year but rose 4 percent from September. Auctions now represent 15 percent of all sales nationally.
Moves by the central bank to clamp down on the level of high loan-to-value ratio mortgages amid concern rising prices were a risk to the nation's financial stability have taken the steam out of the property market and REINZ reiterated its time for them to be reviewed.
"It's clear that the volume of properties sold across the country is still significantly lower than it was this time last year. Therefore we welcome the Reserve Bank's comments last week that they will make an announcement later this month around reviewing the restrictions and criteria they would adopt for the removal of LVRs," chief executive Bindi Norwell said.
At last week's monetary policy review, acting Reserve Bank governor Grant Spencer hinted the bank is looking at winding back its loan-to-value restrictions now the housing market is cooling. "We are certainly reviewing the restrictions and the criteria we'd adopt for their removal," and will discuss the LVRs at the financial stability review later this month, he said. The financial stability report is scheduled for Nov. 29.
"The data is evidence that the LVR restrictions have done their job of slowing the market," said Norwell. REINZ has repeatedly called for LVRs to be reviewed, in particular for first-time buyers.
The REINZ house price index edged up 0.2 percent in October from September to a fresh record of 2,708. Seven regions reached new highs during October "indicating strong value growth across most of the country," the institute said. The house price index considers the mix and value of the property sold, not just the sales price. Only three regions - Northland, Waikato, and Canterbury - registered a decrease in the index month-on-month.
When compared to October last year, the highest value growth was recorded in Gisborne/Hawke's Bay, up 16 percent, Tasman/Nelson/Marlborough/West Coast, up 11 percent and Southland up 11 percent.
The number of properties available for sale increased 4 percent to 24,307 on the year. In the Auckland region, the number of properties for sale jumped 17 percent to 8,465 while outside Auckland inventory fell 2 percent to 15,843, highlighting the impact the country's biggest city has on the nationwide data.
The median house sale price lifted 3.9 percent to $530,000 versus a year earlier. Excluding Auckland, the median price rose 8.5 percent, while Auckland's median price fell 3.2 percent to $850,000, the biggest drop since December 2010.
However, the decrease in Auckland is largely due to a large number of apartments being sold in the old Auckland city boundary, which brought the median price down for the entire region, REINZ said. The only other region to experience a fall in the median price year-on-year was Nelson, which saw a decrease of 6.8 percent to $447,500, the biggest drop since April 2012.