Modest Recovery in Housing Prices, Volumes in Feb

[Full release with charts REINZ_Press_Release_February_2011.docx
Tables Residential_Market_Statistics__February_2011.pdf]

News Release 14 March 2011

Modest Recovery in Housing Prices and Volumes in February

The national housing market staged a modest recovery in February in terms of both prices and volumes during the month. Across the country 4,502 unconditional sales were reported, a 38% increase over the prior month – or a 45% increase when Canterbury/ Westland figures are excluded from both totals. The national median increased $10,000 from the January figure to reach $350,000 and equal the median recorded at the same time last year.

“Overall, the data is a bit of a mixed bag” said REINZ CEO Helen O’Sullivan, “February’s transaction volumes were always going to be an improvement on January, but the improvement in the raw medians in most districts as well as in the stratified median prices is a positive sign.”

“The recovery in transaction volumes in Auckland and Manawatu/Wanganui is encouraging, with both areas recording higher numbers of transactions in February 2011 than in the same month of 2010. In fact, Auckland’s transaction volumes were marginally higher – by just one transaction – than in February 2009. On the less positive side, the overall transaction numbers are still 4.3% below the February 2010 level, and median days to sell increased nationally and in most areas.”

Reports from members indicate that although rents are rising in key urban areas and there is a continuing shortage of housing stock, particularly in Auckland, buyers are still being cautious. This is evident in the increased days to sell, which measures the time between the property being listed and an unconditional sale being completed. Equally, vendors are not under pressure to sell and landlords are successfully increasing rents, albeit by small increments.

Looking forward, O’Sullivan says, “The recent cut in the OCR by the Reserve Bank of 50 basis points may provide some encouragement to buyers – equally however it makes it easier for current owners to hold if they don’t see the pricing they expect. We would be really pleased if the rate decrease had a positive impact on the construction of new housing stock, especially in the Auckland market.”

Christchurch (Canterbury/Westland District)

The Canterbury earthquake in the last week of February has had an impact on the volumes for that area and on the national total, so caution is required in analysing the data. A small percentage of Christchurch offices were unable to file returns for February, and some sales reported as going unconditional in February may not complete if there has been substantial property damage. Future sales are likely to be conditional on structural and geotechnical assessments, which will take time to complete; however inability to procure insurance cover is currently the single biggest impediment to transactions in Canterbury. (For further coverage of the issues in Canterbury, see the Canterbury / Westland section below)

On the basis of transactions reported, volumes were reduced by half in Christchurch City in February (compared with the prior year); however, the REINZ Housing Price Index for Christchurch recorded a 1% gain for the month. 85% of agents in Canterbury were able to provide statistical returns for February – a remarkable proportion under the circumstances.

Further Data

Across New Zealand the total value of residential sales, including sections rose to $1.92 billion in February 2011, compared to $1.3 billion in January 2011.

The breakdown of the value of properties sold in February 2011 is:

$1 million plus 135 3.0%
$600,000 to $999,999 550 12.2%
$400,000 to $599,999 1,125 25.0%
Under $400,000 2,692 59.8%
All Properties Sold 4,502 100.0%

The national median days to sell rose from 51 days in January 2011 to 58 days in February 2011, compared with 46 days in February 2010. All regions apart from Nelson/Marlborough recorded an increase in days to sell, with Northland recording the longest days to sell at 111 days and Nelson/Marlborough the shortest at 48 days. Auckland’s days to sell rose from 41 days in February 2010 to 50 in February 2011, while Wellington’s days to sell jumped from 32 days to 49 days over the same time period. Feedback from agents indicates that buyers are being cautious and including prudent due diligence processes such as building reports in conditional periods.

The REINZ Housing Price Index rose 2.3% in February compared with January 2011, with the stratified median house price at just below $360,000. Increases were recorded across the country. Compared to February 2010, the Housing Price Index fell 0.7%, and the Index is now 5.6% below the peak recorded in November 2007. The Section Price Index fell 6.0% reversing the increase recorded in January 2011. (see table and chart below).

ENDS

[Regional commentaries below. Full release with charts REINZ_Press_Release_February_2011.docx
Tables Residential_Market_Statistics__February_2011.pdf]

For more real estate information and market trends data, visit www.reinz.co.nz. For New Zealand's most comprehensive range of listings for residential, lifestyle, rural, commercial, investment and rental properties, visit www.realestate.co.nz - REINZ's official property directory website.
Editors Note:
The monthly REINZ residential sales reports remain the most contemporary and up-to-date statistics on house prices and sales in New Zealand. They are based on actual sales reported by real estate agents. These sales are taken as of the date that a transaction becomes unconditional and includes sales as of 5:00pm on the last business day of the month.
The REINZ Monthly Housing Price Index is calculated using a technique known as stratification, which provides an averaging of sales prices for common groups of houses. This approach is considered a more robust analysis of actual house price trends and was developed in conjunction with the Reserve Bank.
The REINZ Monthly Housing Price Index is based on a value of 1000 in January 1992, the first month for which electronic information is available. Changes in the index represent movements in housing prices, where the mix of sales between the groups is held constant and are more likely to reflect genuine property price movements.
Other surveys of the residential property market are based on information from Territorial Authorities regarding settlement and the receipt of documents by the Authority from a solicitor. As such, this information involves a lag of four to six weeks before the sale is recorded by the Territorial Authority.

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Regional Commentaries – February 2011

Northland

The median price for Northland rose modestly between January 2011 and February 2011, but the results within Northland were mixed. Whangarei City recorded solid gains in prices, however, these were offset by falls in Whangarei Country. Volumes improved significantly compared to January 2011, but were down by a quarter compared to February 2010.

Northland’s days to sell reached 111 days, up 15 days compared to January 2011 and up more than 60% compared to February 2010. Northland’s days to sell have set a new record, beating the old record of 96 days set in October 2000 and again in January 2011.

Auckland Region

Strong growth in prices in the North Shore in February 2011 compared with January 2011 were offset by falls in the outer parts of the region and Rodney District. There was modest price growth in Manukau City, but Waitakere and Auckland City did not register any significant price movements between February 2011 and February 2010. Across the Auckland region, price movements were modest. There is some indication of investors returning to the market to acquire well priced rental properties as a result of increasing rental returns.

Volumes were up strongly in February 2011 compared to January 2011, however, Waitakere City recorded a comparatively modest rise. Compared to February 2010, North Shore recorded strong volume growth, but Rodney and Outer Auckland both recorded significant falls. The number of homes sold in February 2011 is also very similar to the volumes in February 2009.

Auckland’s days to sell increased from 41 days in January 2011 to 50 days in February 2011. Days to sell were also 41 days in February 2010. Auckland’s days to sell at 50 days is at the upper end of February results for the past 10 years.

Waikato/Bay of Plenty/Gisborne

Prices generally fell modestly across the Waikato/Bay Of Plenty region during February compared to both January 2011 and February 2010, although there was some positive price movement in Taupo. Compared to February 2010 medians dropped noticeably in Waikato Country and Mt Maunganui/Papamoa; however, given the relatively small data set medians need to be treated with some caution.

Volumes were up strongly compared to January 2011, but compared to February 2010 the picture was more mixed. Taupo’s volumes were markedly stronger as a result of vendors being more willing to accept the current market pricing. Waikato Country and Rotorua recorded noticeable falls in the number of sales, while Mt Maunganui/Papamoa recorded a noticeable increase.

The median days to sell jumped to 79 days across the region, compared to 66 days in January 2011 and 62 days in February 2010. This is the longest median days to sell for the Waikato/Bay of Plenty region since January 1992 and exceeds by 1 day the previous record set in February 2009.

Hawkes Bay

The median house price rose noticeably in Napier between January 2011 and February 2011, but recorded a 5% fall compared to February 2010. Hastings recorded no change between January 2011 and February 2011, but a slight modest increase compared to February 2010. Across the region the median price only moved modestly between January 2011 and February 2011, and no change was recorded compared to February 2010.

Volumes were stronger in Hastings, but weaker in Napier compared to both January 2011 and February 2010.

The median days to sell was 60 days for February 2011 compared to 55 days in January 2011 and 45 days in February 2010. 60 days to sell is at the upper end of the medians reported over the past ten years.

Manawatu/Wanganui

The Manawatu/Wanganui region recorded a very mixed result for both median prices and volumes for February 2011. Changes to the median price were modest for Palmerston North compared to January 2011 and February 2010, but volumes were very strong across the same time periods. In comparison, Wanganui recorded an increase in medians, but weak volumes. Overall, the regional volume growth was largely driven by Palmerston North, with Wanganui providing the median price growth.

Indications are that well presented properties in the $200 - $300,000 range are attracting both first home buyers and investors, however, buyers are undertaking plenty of research and are not being rushed. The median days to sell increase to 65 days in February 2011 compared to 52 days in January 2011 and 53 days in February 2010.

Taranaki

The median house price dropped noticeably in Taranaki Country between January 2011 and February 2011 and fell by more than 11% compared to February 2010 – however, the data set is small and medians need to be treated with some caution. Volumes for Taranaki Country also fell markedly compared to February 2011. New Plymouth City recorded a recovery in volumes during February 2011 compared to January 2011 and the volumes are in line with February 2010.

Across the region prices rose modestly between January 2011 and February 2011, but were flat compared with February 2010. Across the region the lift in volumes in February 2011 compared to January 2011 was significantly weaker than the lift in volumes across the rest of the country (excepting Canterbury/Westland).

The median days to sell in Taranaki reached 64 days in February 2011, compared to 54 days in January 2011 and 49 days in February 2010. The median days to sell is back at the same level recorded in December 2010.

Wellington

The median house price for the Wellington region increase 10.4% between January 2011 and February 2011 with strong growth reported in Hutt Valley and Central Wellington. Compared to February 2010 the median price rose strongly in Hutt Valley and to a less extent in Central Wellington. Across the rest of the region results were mixed.

Volumes were up strongly in February 2011 compared to January 2011 except in Western Wellington. This part of the city also recorded the weakest volumes compared to February 2010. Volumes compared to February 2010 were also weak in Eastern Wellington, although there was very strong growth recorded in Upper Hutt.

The Wellington region’s median days to sell fell from 60 days in January 2011 to 49 days in February 2011, but this was up markedly on the 32 days recorded in February 2010.

Nelson/Marlborough

Median price movements across the Nelson/Marlborough were modest in February 2011 compared to both January 2011 and February 2010. The volume lift in February 2011 compared to January 2011 was less than half that recorded nationally (excepting Canterbury/Westland), while the drop of almost 21% compared with February 2010 was the weakest of all regions (excepting Canterbury/Westland).

Somewhat unexpectedly Nelson/Marlborough was the only region to record a drop in median days to sell, with February 2011 recording 48 days compared to 57 days in January 2011 and 55 days in February 2010.

Canterbury/Westland

The Canterbury/Westland results have been impacted by the February 22 earthquake, which means that the results should be treated with caution and cannot be relied on as an indicator of trends. A small percentage of Christchurch offices were unable to file returns for February, and some sales reported as going unconditional in February may not complete if there has been substantial property damage. Normal confirmations of sale were interrupted following 22 February for obvious reasons, but also because a large proportion of legal firms were unable to access their premises. Some of these transactions may be reflected in March figures instead.

Future sales are likely to be conditional on structural and geotechnical assessments, which will take time to complete; however inability to procure insurance cover is currently the single biggest impediment to transactions in Canterbury. All insurance companies are imposing stand down periods, with the minimum reported period being 21 days. March will also be impacted by the lack of availability of media advertising anywhere in the city until around 9th/10th March, nearly three weeks after the quake. Transactions, which are conditionally concluded in March, are unlikely to complete in that month due to these limitations.

Central Otago Lakes

The median house price rose noticeably between January 2011 and February 2011 in Queenstown, although the median price in Central only increased modestly. Volumes in February 2011 were also up significantly compared to January 2011, but were down markedly compared to February 2010.

The median days to sell for the Central Otago Lakes region increase from 52 in January 2011 to 67 in February 2011, similar to the 66 days recorded for February 2010.

Otago

The median house price for Dunedin and the Otago region rose noticeably in February 2011 compared to January 2011 and modestly compared to February 2010. Volumes were up strongly across the region between January 2011 and February 2011, and Otago recorded the 3rd strongest movement in volumes compared to February 2010 of all the regions.

The median days to sell only increased modestly compared to most other regions, with the median days to sell rising only 2 days between Januarys 2011 and February 2011 to 57 days. The annual change in median days to sell between February 2010 and February 2011 was only 6 days; from 51 days to 57 days.

Southland

Median house prices rose noticeably in Invercargill and across the region generally, but there was a significant fall in the median price in Gore. Volumes were up, in line with the national movement in both Invercargill and Gore in February 2011 compared to January 2011, but elsewhere in the region volumes were noticeably weaker.

The median days to sell for February 2011 was 52 days, an improvement on the 57 days recorded for January 2011, but significantly weaker than the 32 days recorded for February 2010.

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