Spring Real Estate Market Roars Into Life in October

News Release 9 November 2012

Spring Real Estate Market Roars Into Life in October

Summary

• Sales up almost a third year on year
• National median house price at new record median of $380,000
• $1 billion more property sold in October 2012 than October 2011
• New record median house price for Auckland region
• More than 20% of all sales for the month of October were auction sales

Keen buyers across the country are driving strong growth in the volume of residential properties sold in October. Sales are 32.6 per cent up on October 2011 and the national median house price is at a new record of $380,000.

The Chief Executive of the Real Estate Institute of New Zealand (REINZ), Helen O’Sullivan, says the springtime surge in new listings is struggling to keep pace with buyer demand leading to a further drop in the average number of days taken to sell to 32 days.

Sales volumes rose across the country in October but prices did not automatically follow.

“The market is very much in two parts – the metropolitan regions of Auckland, Wellington and Christchurch where prices are rising and the rest of the country where price trends are mixed.”

“Within Auckland, most of the activity is in close proximity to the central city, the northern suburbs and eastern beaches. Buyer enthusiasm is less evident in South Auckland and the rural fringes north and south which is reflected in smaller increases in the median price and a longer time for sales to be achieved. ”

REINZ data shows there were 6,640 unconditional residential sales in October, an increase of 1,633 sales (+32.6%) compared with the same time last year and an increase of 17.5% compared to September. On a seasonally adjusted basis October’s sales were 5.7% higher than September and 24.7% higher than October last year.

The national median house price increased by $9,000 from $371,000 in September to $380,000 in October; an increase of 2.4%. Auckland’s median house price moved up 2.9% compared to September to a new record median price of $530,000. The national median house price is up 5.8% compared to October last year, while the Auckland median price is up 14.0% compared to October last year.

Sales volumes

All regions recorded increases in sales volume compared to October last year, with Central Otago Lakes recording an increase of 54.4%, followed by Northland with 52.0% and Hawkes Bay with 47.7%. All regions recorded increases in sales volume in October compared to September, with Taranaki recording a 56.7% increase followed by Wellington with a 27.2% increase and Hawkes Bay with a 23.8% increase.

Demand for more expensive homes is rising much faster than the increase in prices or sales volumes. In the past year, sales of houses in the $600,000-$ 1million band increased 73%, and in the Over $1 million band sales have increased by 96%.

Prices

For the month of October, Canterbury/Westland recorded the highest lift in prices for the month with an increase of 3.9%, followed by Auckland with 2.9%, and Otago with 2.1%. Compared to October 2011, Auckland recorded the highest lift in prices with an increase of 14.0%, followed by Canterbury/Westland with 4.3% and Otago with 3.4%.

The REINZ Stratified House Price Index, which adjusts for some of the variations in mix that can impact on the median price, is 6.9% higher than October 2011 and is at another record high. The House Price Indices for Auckland and Wellington also set new record highs in October.

Days to sell

The national median days to sell improved by one day in October compared to September, from 33 to 32 days, with the number of days to sell also improving by three days compared to October 2011. For the month of October, Canterbury/Westland recorded the shortest days to sell at 28 days, followed by Auckland and Otago with 29 days. This is the second shortest number of days to sell for the Canterbury/Westland region since April 2007. Northland recorded the longest number of days to sell at 58 days, followed by Taranaki with 56 days and Central Otago Lakes with 54 days. Over the past 10 years the median days to sell for the month of October has averaged 33 days across New Zealand.

Auctions

Nationally there were 1,343 dwellings sold by auction in October representing 20.2% of all sales, up from 689 sales in October 2011 representing 13.8% of all sales. This is a new national record for the percentage of sales by auction and beats the previous high of 20.0% reached last month. Auction sales in Auckland also reached a new record with more than 38% of all sales in the region in October sold by auction, or more than 1,000 sales.

Transactions in Auckland again dominated the auction market, representing 74.7% of the national total of auction sales. 38.0% of all dwelling sales in Auckland were by this method in October; this was up strongly from the 26.4% of sales by auction in October 2011. Sales by auction in Waikato/Bay Of Plenty accounted for 9.4% of the national total, Canterbury/Westland accounted for 7.8% of the national total, and all other regions combined accounted for the remaining 8.1% of auction sales in October 2012.

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Further Data

Across New Zealand the total value of residential sales, including sections was $3.15 billion in October, compared to $2.62 billion in September, and $2.15 billion in October 2011. For the 12 months ended October 2012 the total value of residential sales was $32.59 billion.

The breakdown of the value of properties sold in October 2012 is:

$1 million plus 328 4.9%

$600,000 to$999,999 1,039 15.6%

$400,000 to $599,999 1,746 26.3%

Under $400,000 3,527 53.1%

All Properties Sold 6,640 100.0%

REINZ Stratified Median Housing Price Index

The REINZ Housing Price Index increased 1.5% in October compared with September to sit at 3,495.1, a new record high. The REINZ Housing Price Index also recorded new record highs in Auckland and Wellington. All areas, apart from Other South Island recorded increases in October. Compared to October 2011 the REINZ Housing Price Index rose 6.9%, Auckland rose 14.4% and Christchurch 7.0%.

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* CAGR is Compound Annual Growth Rate

* The Christchurch data needs to be treated with some caution due to compositional changes in the suburb mix caused by the earthquakes in the city

REINZ Stratified Median Housing Price Index Chart

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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.

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.

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