Improving volumes, easing prices in Real Estate Market

News Release 13 June 2011

Improving volumes, easing prices in May 2011 Real Estate Market

The national housing market recorded a further lift in volumes during the month of May, with the seasonally adjusted number of sales up 2.6% compared to April, according to REINZ figures, the most up-to-date data series on the New Zealand real estate market. Across New Zealand 5,766 unconditional sales were reported for the month of May, up 779 on the number of sales reported for April and 560 more than last May. The national median house price at $350,000 was equal to the same month of last year, but down by $10,000 from April 2011.

Across New Zealand the Manawatu/Wanganui region recorded the strongest lift in prices (+4.5%) for the month of May. Most regions experienced a slight decline in prices, in line with the movement in the national median. There were also strong lifts in volumes across a number of North Island regions, with South Island regions experiencing a fall in volumes after a stronger performance in April.

“The May results show further steady increases in volumes across New Zealand with particular strength coming from the Auckland market. Although prices eased slightly, there are signs of pressure building, with a lack of new listings becoming apparent in many parts of the city”, said REINZ Chief Executive Helen O’Sullivan, “We are also seeing indications from a number of other parts of the country of an emerging shortage of listings.”

The BNZ-REINZ Market Survey of real estate agents shows that the shortage of listings has now emerged as the second most popular reason holding buyers back, replacing concerns about securing finance. In addition to the tightening market in Auckland, concerns about shortages of listings are appearing in Palmerton North, Taranaki and certain parts of Christchurch.

Despite volumes rising from previous levels the real estate market is only just starting to emerge from a sustained slump in activity. The number of sales in May 2011 was just 62% of the volumes in the month of May 2007 (5,776 vs 9,285). For the 12 months ended May 2007 there were 105,886 sales compared to 55,389 for the 12 months ended May 2011. The national median house price in May 2007 was $350,000, exactly the same as the median house price recorded this month.

The national median ‘days to sell’ (measuring the number of days from listing date to unconditional date) eased from 43 days in April 2011 to 45 days in May 2011, compared with 43 days in May 2010. Auckland again recorded the shortest days to sell at 36 days, with Canterbury/Westland next shortest at 41 days. Central Otago Lakes recorded the longest number of days to sell at 89 days, with Northland next longest at 79 days. Most regions recorded an easing in the number of days to sell, with only Canterbury/Westland and Southland showing an improvement.

Further Data

Across New Zealand the total value of residential sales, including sections rose to $2.46 billion in May 2011, compared to $2.21 billion in April 2011 and $2.27 billion in May 2010.

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

$1 million plus 180 3.1%
$600,000 to$999,999 695 12.1%
$400,000 to $599,999 1,421 24.6%
Under $400,000 3,470 60.2%
All Properties Sold 5,766 100.0%

The REINZ Housing Price Index fell 1.8% in May compared with April 2011, with the stratified median house price at just under $359,000. The REINZ Housing Price Index recorded increases in Christchurch and Other North Island, but also recorded falls in Auckland, Wellington and Other South Island.

Compared to May 2010, the Housing Price Index fell 0.7%, and the Index is now 5.8% below the peak recorded in November 2007. The Section Price Index rose 12.6% in May 2011 and is now 13.5% below its peak recorded in July 2008. (see table and chart below).

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Editor’s 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. Other surveys of the residential property market are based on information from Territorial Authorities regarding settlement and the receipt of documents by the relevant Territorial 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.
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.

Regional Commentaries – May 2011

Northland

The median house price in Northland eased further during May, down 2.4% compared to April 2011, although prices are down 12.3% compared to May 2010. However, prices have risen in Whangarei City against the regional and national trend. Volumes for Northland were the highest for 12 months, bouncing back after a weak April result.

Northland’s days to sell eased six days from 73 in April 2011 to 79 in May 2011 and 63 days in May 2010.

Auckland Region

The Auckland region median house price eased $15,500 or 3.2% in May after hitting an all time high in April 2011. Despite this easing prices rose in Rodney and Outer Auckland, but fell in Auckland City and Manukau City. Sales volumes across the region were stronger than the national result with particular volume strength in Rodney, Waitakere City and Outer Auckland.

A common theme amongst real estate agents in Auckland is the low level of new listings and increasing buyer frustration in finding properties that meet their needs.

The Auckland region’s days to sell at 36 days was again the shortest recorded for all regions in May 2011, although this represented an easing of 2 days compared to April 2011, but one day better than May 2010.

Waikato/Bay of Plenty/Gisborne

Volumes were up 18.4% across the region in May 2011 compared to April 2011 and up 23.1% compared to May 2010. The Waikato/Bay of Plenty/Gisborne area recorded the second highest rise in volumes compared to May 2010. The lift in volumes was widespread with only Rotorua and Taupo recording a decline in volumes.

The median house price for the Waikato/Bay of Plenty/Gisborne region rose just $2,125, or 0.7% in May 2011 compared to April 2011, although there were strong price increases in Taupo and Mt Maunganui/Papamoa. Prices were weaker in Hamilton City and Rotorua.

The median days to sell across the region eased to 64 days in May 2011 compared to April 2011 and 55 days in May 2010.

Hawkes Bay

The median house price in Hawkes Bay eased by $3,500 or 1.3% in May 2011 compared to April 2011. Compared to May 2010 the median house price has eased by $8,000 or 2.9%. Volumes across the region were noticeably stronger in May 2011 after a weak April 2011 result, but also show strength compared to May 2010 with a 7.7% increase in volumes across the region.

Anecdotal evidence from agents in the Hawkes Bay indicate that properties prices below $400,000 have been selling well and that there is an emerging feeling of optimism coming into the property market.

The median days to sell for the Hawkes Bay region eased noticeably to 58 days in May 2011 from 41 days in April 2011. The median days to sell for May 2010 was 49 days.

Manawatu/Wanganui

The median house price for the Manawatu/Wanganui region rose by 4.5% in the month of May 2011, the strongest regional performance across New Zealand. Compared to May 2010 the Manawatu/Wanganui region recorded the second strongest rise in prices. Prices rose noticeably in Fielding.

The lift in volumes was also above the national median with 27.4% more houses sold in May 2011 compared to April 2011 and almost 20% compared to May 2010. Palmerston North City showed consistent volume growth across both periods, while other parts of the region had more mixed results.

There appears to be an emerging shortage of listings occurring in Palmerston North City with a noticeable increase in buyer interest, although this trend is not consistent across the region.

The region’s days to sell eased 13 days from 49 days in April 2011 to 62 days in May 2011, although the May 2011 result is one day better than May 2010.

Taranaki

The median house price for the Taranaki region eased by $24,500 or 8.8% during May 2011 compared to April 2011, although Harwera did buck the regional trend with a 13.2% rise in the median price. Compared to May 2010 prices were also down 7.3%. There was a noticeable rise in volumes across the region during May 2011, although the almost 70% lift in volumes in New Plymouth City comes on the back of a weak April 2011 result. However, compared to May 2010 the lift in volumes is almost twice the national result.

There is also emerging evidence of a shortage of listings in the Taranaki region with the main concern of vendors being worries about falling prices; in line with the results from the June BNZ-REINZ Market Survey.

The median days to sell in Taranaki fell to 64 days in May 2011, compared to 45 days in April 2011 and 50 days in May 2010.
Wellington

The median house price fro the Wellington region eased by $11,500 or 3.0% in May 2011 compared to April 2010 and by $10,000 or 2.6% compared to May 2010. There were noticeable falls in price in Hutt Valley, Western Wellington and Central Wellington.

Volumes across the region were again noticeably weaker than the national result with the Wellington region being one of only three to record lower volumes in May 2011 than April 2011. Volumes were down noticeably in Western Wellington, Eastern Wellington and Central Wellington, although there was a noticeable life in volumes in Upper Hutt and to a lesser extent in Northern Wellington.

The Wellington region’s median days to sell eased by 5 days from 42 days in April 2011 to 47 in May 2011. Compared to May 2010 the days to sell eased by two days.

Nelson/Marlborough

The median house price for the Nelson/Marlborough region eased by $9,500 in May 2011 compared to April 2011, after an increase of $10,000 in April 2011 compared to March 2011. The region’s median house price eased only $500 compared to May 2010. The result for the Nelson/Marlborough region is almost exactly in line with the national result.

Volumes rose 23.6% in May 2011 compared to April 2011, although are only up 2.6% compared to May 2010. Care needs to exercised with the Richmond result given the small number of sales occurring in that suburb.

The Nelson/Marlborough region’s days to sell remained steady at 57 days in May 2011 compared to April 2011, and increased by 13 days compared to May 2010.

Canterbury/Westland

The median house price in the Canterbury/Westland region eased by $2,000 or 0.6% in May 2011 compared to April 2011, and increased by $4,250 compared to May 2010. There were noticeable price increases in Mid-Canterbury and West Coast, with some lift in prices in Christchurch City.

Volumes in Christchurch City were up nearly 10% in May 2011 compared to April 2011, although still 30% down in May 2010 due to the on going effects of the two earthquakes in the region. There has been a noticeable lift in volumes in Mid-Canterbury, Timaru and on the West Coast. Anecdotal evidence indicates that towns on the outskirts of Christchurch are busy and there is increasing activity in the western and northern suburbs of Christchurch City. There is also an emerging shortage of listing in Christchurch City.

The median days to sell in the Canterbury/Westland region improved by eight days from 49 days in April 2011 to 41 days in May 2011. The days to sell in May 2010 was also 41 days.

Central Otago Lakes

After a strong lift in prices and volumes in April 2011 the Central Otago Lakes region experienced something of a lull with a 16.1% fall in the median house price and an 11.3% drop in volumes compared to April 2011. However, volumes are significantly stronger than May 2010.

The median days to sell for the Central Otago Lakes region leapt from 47 days in April 2011 to 89 days in May 2011 and compares with 67 days in May 2010. The jump in days to sell is due to a number of properties that have been on the market for some time being sold during May.

Otago

The median house price for the Otago region was flat in May 2011 compared to April 2011, although there was an easing of prices in Dunedin City but a noticeable lift in prices in North Otago. Prices in May 2011 were up $5,000 or 2.2% compared to May 2010, although across that same period prices increased in Dunedin City and fell in North Otago.

Volumes across the region were down 4.4% in May 2011 compared to April 2011, the second poorest regional performance in the month. Compared to May 2010 volumes were up 3.9%, although this rise is modest compared to the national result.

Anecdotal evidence suggests rising buyer interest with steady inquiry from Christchurch residents looking to relocate once insurance matters are finalized on their Christchurch properties.

The median days to sell remained steady at 47 days in May 2011 compared with April 2011, and is a one day improvement on the 48 days to sell recorded in May 2010.

Southland

The median house price for the Southland region eased by $12,750 or 6.6% in May 2011 compared to April 2011, reversing the rise recorded in April 2011. Prices eased 8.4% compared with May 2010. Despite the fall in prices across the region the volumes were noticeably stronger than the national result, with a 27% lift in volumes compared to April 2011 and a 17.6% lift in volumes compared to May 2010.

The Southland region’s days to sell improved by seven days to 43 days from 50 days in April 2011. However, compared to May 2010 the days to sell eased by eight days from 35 days

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