Residential Real Estate Market Ends 2014 with Sales Surge

News Release 15 January 2015

Residential Real Estate Market Ends 2014 with Sales Surge

Summary

• 7,064 dwellings sold in December 2014, up 24.2% on December 2013; strongest December sales since 2006 and the second strongest December on record
• National median price of $450,000, up $23,000 on December 2013 and down $5,750 on November 2013
• Auckland median price reached a new record of $678,000
• Annual increase over 2014 in the national median price of 5.4%, compared with 9.8% over the 2013 year
• 74,537 dwellings were sold in 2014, down 7% on the number sold in 2013. The number of dwellings sold in 2014 represents only 4.2% of all private dwellings in New Zealand
• 1,439 dwellings sold by auction in December, representing just over 1 in 5 dwellings sold by auction

REINZ, the most up to date source of real estate data in New Zealand, announced today that there were 7,064 dwelling sales in the month of December, up 24.2% on December 2013 and down 4.7% compared to November. The national median price was $450,000 for the month of December, an increase of $23,000 or 5.4% compared to December 2013, and a decline of $5,750 or 1.3% from November.

Real Estate Institute of New Zealand (REINZ) Chief Executive Helen O’Sullivan says, “The data for December shows very strong sales growth compared to 12 months ago and a much higher level of sales that we would normally expect for the final month of the year. The effect has been seen right across the country, with a number of regions seeing further increases in sales in December after a strong November. The normal December slow down hasn’t really happened in 2014.”

“Apart from Auckland, median prices across the country have moderated somewhat. For the year ended December, Auckland’s median price rose by 13%, but the national median rose by only 5.4%. Even Canterbury, which has seen strong price growth during 2014 has seen its rate of price increase pull back to under 2% for the 12 months to December 2014.”

“The real estate market remains split between Auckland, with strong demand and price growth, and the rest of the country. While a number of regions are experiencing listing shortages the situation in Auckland is acute, with less than three months supply available and demand continuing to be robust. Vendors are simply not coming forward in large enough numbers to meet the demand, despite the strong price rises seen in Auckland over the past three years.”

Sales Volumes
REINZ data shows there were 7,064 unconditional residential sales in December 2014, a 24.2% increase on sales recorded for December 2013, and a fall of 4.7% from November. Typically, sales in December are noticeably lower than November due to the school holidays and Chirstmas break. On a seasonally adjusted basis the number of sales was up 4.6.% on November, indicating that sales for December were a lot stronger than would normally be expected for this time of year.

Four regions recorded an increase in sales volume compared to November with Hawkes Bay recording the largest percentage increase of 7.2%, followed by Nelson/Marlborough with 6.8% and Northland with 4.2%. All regions recorded an increase in sales volume compared to December 2013 with Manawatu/Wanganui recording the largest increase of 39.7%, followed by Waikato/Bay of Plenty with an increase of 34.8% and Wellington with an increase of 32.5%.

Prices
The national median house price declined $5,750 (-1.3%) to $450,000 compared to November. Compared to December 2013 the national median house price increased by $23,000 (+5.4%), with six regions recording an increase. On a seasonally adjusted basis the national median house price rose 0.2% compared with November and 4.7% compared to December 2013.

Taking total volumes and prices into account, Auckland accounted for 98% of the increase in the median price between December 2014 and December 2013, with the remainder of the country accounting for just 2% of the increase in the median price.

Auckland recorded the largest percentage increase in median price compared to December 2013, with a 13.0% increase, followed by Wellington with a 3.8% increase and Waikato/Bay of Plenty with a 2.7% increase. Compared to November, Auckland recorded the largest percentage increase in median price, up 1.2%, followed by Taranaki with a 0.6% increase.

The REINZ Stratified Housing Price Index, which adjusts for some of the variations in the mix that can impact on the median price, is 6.0% higher than December 2013, at 4,076.6. The Auckland Index has risen 13.5% compared to December 2013, with the Christchurch Index up 3.7% and the Wellington Index up 1.6%.

Days To Sell
Dwellings took a median of 32 days to sell in December, the same number as in December 2013, and two fewer than November. Four regions saw an improvement in the number of days to sell compared to December 2013 with Manawatu/Wanganui recording an improvement of four days, Taranaki an improvement of three days, and Auckland and Waikato/Bay of Plenty an improvement of one day each.

For the month of December, Auckland, Canterbury/Westland and Otago recorded the shortest days to sell at 29 days, followed by Wellington at 35 days. Northland recorded the longest number of days to sell at 59 days, followed by Central Otago Lakes at 53 days and Hawkes Bay at 48 days. Over the past 10 years the median days to sell for the month of November has averaged 34 days across New Zealand.

Auctions
Nationally there were 1,439 dwellings sold by auction in December representing 20.4% of all sales, and an increase of 253 on the number of dwellings sold by auction in December 2013. For the 12 months to December 2014 the percentage of homes sold by auction was 18.5% or 13,800, compared to 16,505 (20.6%) for the year ending December 2013.

Transactions in Auckland again dominated the auction market in December, representing 74.6% of the national total of auction sales. 39.3% of all dwelling sales in Auckland were by auction in December 2014, compared to 37.9% of all dwelling sales in Auckland in December 2013. Sales by auction in Waikato/Bay Of Plenty accounted for 7.4% of the national total, Canterbury/Westland accounted for 11.0% of the national total, and all other regions combined accounted for the remaining 7.0% of auction sales in December 2014.

Further Data
Across New Zealand the total value of residential sales, including sections was $4.025 billion in December, compared to $4.254 billion in November, and $3.068 billion in December 2013. For the 12 months ended December 2014 the total value of residential sales was $40.378 billion. The breakdown of the value of properties sold in December 2014 compared to December 2013 is:

The number of sales under $400,000 rose by 402 (+15.7%) in December 2014 compared to December 2013, compared to an increase of 1,376 sales (+24.2%) for all price brackets between the two periods. Up to this point in 2014 the data has shown a significant drop in sales volume for sales under $400,000. However, with the LVR restrictions now more than 12 months old, the comparative data from last year incorporates the impact of the LVR restictions. This month’s data suggests that there may be some improvement in activity in this market segment.

REINZ Stratified Median Housing Price Index
The REINZ Housing Price Index fell 1.0% compared with November to sit at 4,076.6. Auckland rose 0.3%, Christchurch fell 4.6%, and Wellington fell 2.3%. For the month of December, the Auckland index hit a new record high. For the 12 months to December the Auckland Index rose 13.5%, the Christchurch Index rose 3.7% and the Wellington Index rose 1.6%. The National Index increased 6.0% compared to December last year.

* 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

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1. Deciles: For analysis, REINZ breaks real estate sales into 10 prices bands to comapare trends in prices and sales volumes across the market.
REINZ_Regional_Data__December_2014.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.
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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