House sales continue slide
Mortgage restrictions and rising interest rates are being blamed for unusually weak winter house sales.
The Real Estate Institute of New Zealand (REINZ) figures show house sales nationally for June were down 12.3 per cent from May and down 6.1 per cent compared to a year ago.
The national median price, however, was underpinned by the strong Auckland market, rising to $427,250, 8.4 per cent higher than a year ago.
Infometrics economist Gareth Kiernan said that even allowing for winter, activity in Auckland was at its lowest level in 21 months, and while the market would recover soon, it was "currently softening more than we had anticipated".
He largely blamed the low sales numbers on the Reserve Bank's curbs on low-deposit mortgages which was skewing the median price higher by reducing the number of cheaper-home sales.
Chris Green of First NZ Capital also blamed the loan-to-value ratio (LVR) restrictions, noting there had been a 17 per cent slump in the sale of houses under $400,000, year on year.
REINZ chief executive Helen O'Sullivan said $400,000 was an average-to-high house price in some regions and so the price bracket was partly a mirror of provincial fortunes.
However, turnover in some regions was down 20 per cent, a level that was abnormally low even for winter.
"When you combine interest rate increases with the LVR restrictions I think it has definitely cooled the market" she said.
"Also the looming prospect of more interest rate increases probably has more of an impact on the market than just the increases to date."
Auckland's median house price was $600,000, 8.1 per cent higher than a year ago, but sales fell 6.3 per cent, hampered by a lack of listings and the traditional winter slowdown.
O'Sullivan said it was clear from open-home attendances and the increase in days taken to sell that the pace of the Auckland market was easing.
"The listing numbers are quite tight but we are also seeing that the vendor expectations are a little out of whack with where the market actually is."
Selling times, another gauge of housing confidence, lengthened to 39 days, five days more than a year ago.
However, the proportion of houses sold at auction still appeared healthy, accounting for 20 per cent of all sales against 18.9 per cent the year before.
Despite the falling sales, economists said there were signs the market was steadying. Daniel Smith of ASB said the market had clearly eased considerably since mid-last year, "but recent data showing a stabilisation in activity suggest any further slowdown will be more gradual".
He expected prices in Auckland and Christchurch to continue to grow at a more modest rate and fairly flat prices throughout the rest of the country.
The slowdown in housing inflation was not expected to prevent an interest rate rise next week.
Darren Gibbs of Deutsche Bank said: "Given very strong migrant inflows in recent months we imagine that the Reserve Bank will remain justifiably wary of the significant possibility that migrant-inspired housing demand could reignite upward price pressures, at least for a period."
* Across Auckland, prices rose 8.1 per cent year on year, led by outer Auckland (13 per cent). Sales fell 6.3 per cent, led by Waitakere (-12.4 per cent), North Shore (-10.8 per cent) and Outer Auckland (-6.4 per cent).
* In Waikato/Bay of Plenty, prices rose 5 per cent annually, falling 15 per cent in Rotorua and rising 17.4 per cent in Tauranga. Sales fell 7 per cent, tailing off significantly in Rotorua and Hamilton (-19.7 per cent and -15.5 per cent), but rocketing up 47.6 per cent in Taupo.
* Hawkes Bay prices were flat on an annual basis, and sales eased 8 per cent.
* Sales volumes in the Manawatu fell 8 per cent, with double-digit declines recorded in Palmerston North (25 per cent) and Levin (24 per cent). In contrast, sales in Fielding rose 25 per cent and prices rose 34 per cent. Prices in the region rose 4.5 per cent.
* In Taranaki, house prices moved up 8.1 per cent but sales fell almost 20 per cent.
* Wellington's median house price fell 3.8 per cent and sales eased 4.6 per cent. In the central city sales firmed almost 46 per cent but prices fell 8.3 per cent.
* Prices in Nelson/Marlborough rose 6.1 per cent during the year while sales eased 2.3 per cent and first-home buyer activity remained subdued.
* In Canterbury/Westland, prices were up 12.3 per cent on the previous year and sales slid just 0.8 per cent.
* Sale declines in Central Otago Lakes and Otago both neared 20 per cent, but prices rose 12.8 per cent in Central, while they fell 4.1 per cent in Otago.
* Southland's market was active with a 12.7 per cent rise in sales but a near-18 per cent fall in price.