|Housing Market Blues
The New Zealand housing market is feeling
the blues, with house sales falling and prices dropping in Auckland and other
key markets. After years of unrestrained growth fuelled by demand, the number
of homes being sold around the country is on a steep decline. Wider economic
conditions and difficulty getting finance are both affecting the numbers, with
Auckland sales down almost 20 percent over the year and national figures down
by more than 10 percent.
According to figures from the Real Estate
of New Zealand (REINZ), house sales in Auckland fell 18.2 percent year-on-year,
with national numbers down 10.5 percent. Bindi Norwell, REINZ Chief Executive
said: "At a time when sales volumes are normally very strong and total
sales figures for the country are typically well over the 7000 mark, with 6938
sales this was the lowest number of properties sold for the month of March
since March 2011."
Lower sales volumes are having a negative
impact on prices, at least in some markets. While the national median price
rose 4.5 percent over the year to reach an all-time high of $585,000 in March,
Auckland and other markets are not seeing the same results. Auckland's median
price was just $856,000 in March, compared to $880,000 a year ago and the
all-time high of $900,000 in March 2017. Auckland is now down 4.9 percent from
its peak, with other markets starting to follow.
Wellington also recorded a median price
decline, with prices now at $620,000 after dropping from a record high of
$643,500 in February. It's important to put this decline in perspective,
however, with prices still 5.1 percent more than they were in March 2018. The
situation in Canterbury is similar but less pronounced, with the median price
falling from its peak of $465,000 in October 2018 to $460,000 in March. Once
again, prices are also up on an annual basis, this time by 2.2 percent.
According to Norwell, "Looking at the
Auckland picture, the median price has just continued to hover around the
$850,000 mark – the same thing we've seen for nearly three years now suggesting
that perhaps the Auckland market has found its 'new normal' for the time
being." While mortgage rates are at historic lows and there are great
deals to be had, banks and other borrowers are very risk averse and requiring
more documentation than ever. The potential for a new capital gains tax and
other Government interventions is also creating uncertainly in the market.
According to Norwell, both property
investors and owner-occupiers are struggling to obtain finance: "Despite
some extremely competitive mortgage rates on offer from the banks and the high
chance of an OCR cut in the near future, it appears the legislative changes on
the horizon and the difficulty accessing finance are now really starting to
impact the housing market in terms of sales volumes... Hopefully, as we gain
more certainty over the coming months – particularly in relation to CGT we'll
start to see volumes pick up. However, winter is normally a quieter time of
year, so time will tell what happens with sales volumes going forward."
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