House prices firm in February but volumes down

Median house prices firmed slightly across New Zealand during February with the regions outpacing the nation's largest city of Auckland, according to the Real Estate Institute of New Zealand.

The national median house price increased to $495,000 in February, up 1% from January and 10% higher on the year. Outside Auckland, the median price rose 7.3% from a year earlier, while in Auckland – where prices have skyrocketed up until recently – it was up 6.7%. The number of sales in February was 6,253, down 14% from a year earlier.

Record low interest rates and record high net migration continue to underpin the nation's hot property market but tighter restrictions for highly leveraged lending and having an impact, the institute said in a statement.

Concern about New Zealand's bubbling housing market has prompted policymakers at the Reserve Bank to introduce a series of curbs on mortgage lending and "we hear anecdotally that LVRs are having an effect and banks are reducing lending, becoming more selective about who they lend to, what properties they will lend on and the terms," Reinz chief executive Bindi Norwell said.

Two of 12 regions hit a new median house price record. In Northland, the median price across the region rose 20% on the year to $421,250 while in Otago it rose 18% to $317,250. "The Otago market remains robust with another record median price recorded this month. The demand from investors has reduced but the slack has very quickly been taken up by local home buyers. First home buyer activity remains steady," Reinz regional commentator Liz Nidd said.

In Auckland, however, the median house price increased 6.7% to $800,000 from February a year earlier but slipped 0.6% against January while in the capital city of Wellington the median price increased 16% to $520,750.

"Auckland is a mixed picture: There is something in the market for buyers and sellers. Compared to the same time last year, median prices have increased, inventory has increased and volumes have decreased," Ms Norwell said.

Across New Zealand, the total value of residential sales including sections was $4 billion in February versus $4.2 billion a year earlier and $2.7 billion in January. In the 12 months to February, the total value of residential sales was $58 billion.

The number of homes that sold for more than $1 million rose by 5% on the year, accounting for 11% of all dwellings sold. In comparison, the number of properties sold for under $400,000 fell 26% versus the same month a year earlier.

(BusinessDesk)