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NZ property prices up 2.5 percent in August but market still subdued

Sean Wang - Monday, September 10, 2012

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Residential property prices in New Zealand increased 2.5% nationally in August and auction sales reached a new record level for the month, the latest data shows.

The Auckland property market continues to strengthen as does the market in Christchurch, says the August report from the Real Estate Institute of New Zealand.

The national median house price increased by $9,000 from $361,000 in July to $370,000 in August, an increase of 2.5% and up 4.2% compared with August 2011.

Auckland’s median house price increased 1.1% from the $500,000 level it has stayed steady on for three months, to reach a new record median price of $505,500.

There were 6,035 unconditional sales in August, an increase of 16.2% compared with the same time last year and an increase of 2.2% compared to July.

All regions recorded increases in sales volume compared to August last year, with Northland recording an increase of just under 31%, followed by Auckland with 25.6% and Taranaki with 22.2%. 

Seven regions recorded increases in sales in August compared to July, with Central Otago Lakes recording a 25% increase, Southland an 11.2% increase and Nelson/Marlborough an 8.9% increase. Taranaki recorded a 14% fall in sales in August compared to July, with Manawatu/Wanganui recording an 8.2% fall and Wellington a 2.8% fall in sales. 

Nelson/Marlborough recorded the highest lift in prices for the month with an increase of 9.6%, followed by Taranaki with 7.3%, and Southland with 5.9%.

Compared to August 2011, Auckland recorded the highest lift in prices with an increase of 11.6%, followed by Canterbury/Westland with 6.2% and Wellington with 5.2%.

The REINZ Stratified House Price Index, which adjusts for some of the variations in mix that can impact on the median price, is 6.1% higher than August 2011 and is now at a new record high.

‘House buyers in Auckland are increasingly driving the New Zealand real estate market with a widening gap opening up between the dynamics of the Auckland market and the rest of the country. While both Auckland and Christchurch recorded new record median prices during the month it is the strong sales volume growth in Auckland that is most notable,’ said REINZ chief executive Helen O’Sullivan.

‘Normally at this time of year we see a dip in sales volumes. This year, apart from the weather, winter was cancelled in Auckland. Across the rest of the country while we are continuing to see rising sales volumes, prices continue to reflect the general caution around the economic outlook. In many parts of the country we are also seeing shortages of houses available for sale, often a market feature at the end of winter, although expectations for a rush of listings in the spring are not strong,’ she explained.

‘This increased level of activity does need to be seen in context of an overall housing market that is still subdued and with prices yet to catch up with increases in the consumer price index over the last five years. A sure sign that housing market was back to normal levels of activity would be turnover reaching the pre 2008 long run average. This has yet to happen,’ she added.

The national median days to sell improved by three days in August compared to July, from 38 to 35 days, with the number of days to sell also improving by four days compared to August 2011. Over the past 10 years the median days to sell for the month of August has averaged 36 days across New Zealand.

Auckland recorded the shortest days to sell at 30 days, followed by Canterbury/Westland with 33 and Otago with 37 days. Northland recorded the longest number of days to sell at 76 days, followed by Taranaki and Central Otago Lakes with 58 days.

Nationally there were 1,110 dwellings sold by auction in August representing 18.4% of all sales, up from 588 sales in August 2011 representing 11.3% of all sales. This is a new national record for the percentage of sale by auction and beats the previous high of 16.2% reached in March 2012. Auction sales in Auckland also reached a new record with more than one in three sales in the region in August sold by auction.

Transactions in Auckland again dominated the auction market, representing 73.3% of the national total of auction sales. Just over a third, 34.2%, of all dwelling sales in Auckland were by this method in August. This was up strongly from the 19.4% of sales by auction in August 2011.  Sales by auction in Waikato/Bay Of Plenty accounted for 10.2% of the national total, Canterbury/Westland accounted for 7.7% of the national total, and all other regions combined accounted for the remaining 8.8% of auction sales in August 2012.