Buyers step back, annual median house price growth recedes - REINZ stats May 2022
Thursday, June 16, 2022
Tighter credit conditions, higher mortgage rates and increased housing supply continue to affect the New Zealand property market. Sales are slower to complete, property is staying on the market longer and upward pressure on prices is easing.
Across New Zealand, median prices for residential property increased 2.4% annually, from $820,000 in May 2021 to$840,000 in May 2022. Month-on-month, this represents a 4.0% decrease from $875,000 in April.
The median residential property price for New Zealand excluding Auckland increased 7.6% annually from $678,500 in May 2021 to $730,000 in May 2022. There was a month-on-month decrease of 3.3% from $755,000.
Jen Baird, Chief Executive at REINZ, comments: “Looking at New Zealand as a whole, median prices increased 2.4% annually to $840,000 in May 2022. Month-on-month, there was a 4.0% decrease in median price. Moving from April to May, we tend to see a marginal dip in median property prices. This month, the seasonally adjusted figures show a decrease of 3.1%, indicating a greater drop than expected as we moved from April to May.
“With the exception of the West Coast, median prices in the regions have come off their peak. Auckland was the only region to see an annual decrease in median price — down 2.2% on the same period last year. The region has seen a significant shift in market dynamics, with the median price across the Auckland region decreasing 13.5% since its peak of $1,300,000 in November 2021. In the six months prior, median property prices had increased 13.0%.
“A similar story can be seen in other regions. However, a few are bucking the trend. The West Coast, which saw an annual increase in median prices of 30.8% from May last year, has had a 12.9% increase in median prices since November 2021, off the back of a 15.9% increase over the six months prior. Otago has seen a 4.4% increase since November 2021, following a 7.5% increase in the six months prior.
“Over the course of 2021, house prices soared, largely due to supply not being able to meet demand, supported by historically low interest rates and access to capital. Measures introduced by the Government — including the introduction of LVRs and changes to the Credit Contracts and Consumer Finance Act (CCCFA) — and the ReserveBank OCR hikes have affected market dynamics, and we are now seeing the reverse playout. The price growth of last year is receding.
“With further increases to interest rates to counter inflation expected and global economic uncertainty and supply chain disruption caused by the conflict in Ukraine, we may see market activity settle this winter at its new, slightly slower, pace.
“Real estate professionals across the country note potential buyers are taking their time to make decisions, have more confidence to negotiate prices, and vendors are recognising the market has changed and are adjusting their expectations to meet the market,” Baird observes.
Those with the greatest annual percentage decrease were:
• West Coast: Decreased 52.5% annually from 61 to 29; the lowest sales count for a May month since 2015 (inc. May 2020)
• Auckland: Decreased 38.3% annually from 2,856 to 1,761; the lowest sales count for a May month since 2008 (excl. May 2020)
• Waikato: Decreased 31.5% annually from 744 to 510; the lowest sales count for a May month since 2011 (excl. May 2020)
• Bay of Plenty: Decreased 31.5% annually from 463 to 317; the lowest sales count for a May month since 2010 (excl. May 2020).
Regional Analysis - Northland
“Compared to May 2021, Northland’s median house price has increased by 6.0%, to $721,000. The Northland market is cautious, agents noted that there has been more negotiation required to secure sales, and very few cash buyers or pre-approved buyers are active. Tightened lending criteria are slowing transactions, and rising interest rates are leaving many buyers concerned about longer term affordability.
“There were small numbers attending auctions, but an increased number tuning into auctions online. Clearance rates are down and there has been more negotiating on the floor and post-auction. A drop in sales counts is largely due to buyers acting with less urgency, curious as to whether prices will decline. Agents expect stock levels to increase further, granting more opportunities for buyers to step into the market.” (REINZ)
The current Days to Sell of 48 days is less than the 10-year average for May which is 53 days. There were 29 weeksof inventory in May 2022 which is 16 weeks more than the same time last year.
Regional Analysis - Auckland
“Auckland experienced a decrease in its median house price year-on-year for the first time since October 2019– down 2.2% to $1,125,000. May saw the number of first home buyers and investors decline due to their inabilityto secure finance along with the uncertainty of what further changes may be ahead such as rising interest rates.
“Fortunately, vendors are understanding the market and are adjusting their price expectations accordingly.Auckland agents say the feedback from buyers and moving into winter has helped with this. Selling by auction remains a popular method of sale — particularly in Central Auckland, however, fewer properties were sold by auction when compared to May 2021. Sales counts declined and agents say this may be due to the media stories predicting that prices will continue to decrease, which is encouraging buyers to wait.” (REINZ)
The current Days to Sell of 43 days is more than the 10-year average for May which is 39 days. There were 24weeks of inventory in May 2022 which is 14 weeks more than the same time last year.
Regional Analysis - Waikato
“The median house price in Waikato increased 9.6% year-on-year, to $800,000. Owner occupiers were most prominent in the market in May, and there were fewer first home buyers and investors. Attendance at open homes has been slow. Buyers are acting with caution and waiting for prices to decline further, whilst some are struggling to secure finance. A 31.5% drop in the sales count year-on-year is in part due to less competition fuelled by higher stock levels, growing listings numbers and fewer buyers. Market sentiment has shifted, and properties are not generating the level of enquiry that they were at the end of 2021.
“Agents in the region remain hopeful that the Waikato market will transition to a more positive period oncethe CCCFA criteria relaxes and with the continuation of the removal of border restrictions.” (REINZ)
The current Days to Sell of 40 days is less than the 10-year average for May which is 43 days. There were 23 weeksof inventory in May 2022 which is 16 weeks more than the same time last year.
Regional Analysis - Bay of Plenty
“The Bay of Plenty is loved by locals and remains a popular region for those wanting to relocate from bigger cities and enjoy the lifestyle on offer. Local agents report that owner occupiers backed by equity are dominating the buyer pool, whereas first home buyers and investors are scarce.
In May 2022, the median house price in the Bay of Plenty increased 10.7% year-on-year, to $905,000. The region isstarting to place higher on the REINZ House Price Index (HPI), currently fifth with an 8.6% increase on May 2021 — signifying the underlying value in this market.” (REINZ)
The current Days to Sell of 51 days is more than the 10-year average for May which is 48 days. There were 23weeks of inventory in May 2022 which is 16 weeks more than the same time last year.
Regional Analysis - Gisborne
“Gisborne’s median house price increased 7.3% year-on-year, to $665,000. Whilst inventory levels continue to rise, the number of new listings declined by 27.9% over the course of the past year. With the market slowing, some buyers are seeing opportunities to upgrade without having to pay too much more.
“First home buyers lack confidence in being able to obtain finance, which has contributed to a drop in sales counts. According to agents in Gisborne, the changes to the CCCFA are still having the biggest impact on the market. Over the coming months, agents are looking to the reversal of some of the more restrictive changes tothe CCCFA which may see market activity increase.” (REINZ)
The current Days to Sell of 46 days is the same as the 10-year average for May which is 46 days. There are 16weeks of inventory in May 2022 which is 7 weeks more than last year.
Regional Analysis - Hawke's Bay
“The median house price in Hawke’s Bay was static year-on-year, remaining at $730,000. Vendors continue to seek premium prices, but some are beginning to understand the changing market. Sales counts in Hawke’s Bay decreased 19.5% year-on-year with agents noting that this is in part due to many first home buyers and investors unable to secure finance. Since the Government’s Budget announcement in mid-May, which increased First Home Grant caps, more first home buyers have shown interest, but this has not transferred to sales just yet. The marketin Hawke’s Bay is fragile — rising interest rates are becoming the biggest concern of buyers.” (REINZ)
The current Days to Sell of 52 days is more than the 10-year average for May which is 43 days. There were 22weeks of inventory in May 2022 which is 16 weeks more than the same time last year.
Regional Analysis - Taranaki
“Compared to a year ago, Taranaki’s median house price increased 18.9%, to $630,000. Stock levels increased by 54.2% year-on-year, but new listings slightly decreased. The most active buyers in the market were those looking for middle to upper end properties — many of whom were owner occupiers. First home buyers continue to find affordability a challenge, with an additional concern of rising interest rates.
“Attendance at open homes was consistent throughout the month, many buyers were looking rather than making a commitment, with agents noting they may be waiting for prices to decline. Sales counts have dropped 5.3% year-on-year, partly due to a fear of overpaying among buyers.” (REINZ)
The current Days to Sell of 39 days is less than the 10-year average for May which is 43 days. There were 13 weeksof inventory in May 2022 which is 5 weeks more than the same time last year.
Regional Analysis - Manawatu/Whanganui
“Manawatu/Whanganui’s median house price increased 5.6% year-on-year to $603,000. The Ruapehu Districtreached a record median of $470,000. In May, owner occupiers were the most active buyer segment, whereasthe number of investors and first home buyers declined due to tightened lending criteria, rising interest rates andhigh price expectations held by some vendors.
“Attendance at open homes improved, but many buyers were not acting with the sense of urgency as late lastyear — unsurprisingly, as stock levels increased 140% year-on-year there is now a wide range of choice. Agents in the region say they expect the current slower market conditions to continue until vendors decide to lower their price expectations.” (REINZ)
The current Days to Sell of 50 days is less than the 10-year average for May which is 43 days. There were 22 weeksof inventory in May 2022 which is 16 weeks more than the same time last year.
Regional Analysis - Wellington
“Wellington’s median price increased 1.2% year-on-year to $895,200. However, the South Wairarapa District reached a record median of $1,310,000. The most active buyers were those looking to upsize and who are backed with equity. First home buyers have shied away from the market — and attendance at lower end open homes is sparse. A lack of confidence in the market has seen sales counts decline by 29.7% and properties spend an additional 23 days on the market than this time last year. There is a belief in the market that house prices will decline further, and buyers have adopted a fear of over-paying. According to Wellington agents, supply is well and truly outweighing demand.” (REINZ)
The current Days to Sell of 55 days is much more than the 10-year average for May of 39 days. There were 20weeks of inventory in May 2022 which is 15 weeks more than the same time last year.
Regional Analysis - Nelson/Marlborough
An easing of price growth is evident in all three regions — Nelson, Marlborough and Tasman saw median prices increase 7.0%, 8.5% and 1.0% to $750,000, $705,000 and $848,000 respectively. Agents in Marlborough say multioffers are starting to return. Post-harvest in Marlborough saw more people attend open homes, but the number of auctions slow. Compared to May 2021, sales counts decreased in Marlborough and Tasman but increased by 4.5% in Nelson. Agents say that buyers’ lack of urgency has contributed to this, coupled with tightened lendingcriteria slowing the purchase process.
“First home buyers are scarce, and despite the Government’s Budget announcement in May which increased the First Home Grant caps, agents say there is still not enough stock available within these new price caps. Agents predict that this winter will be slower than usual due to market headwinds.” (REINZ)
The current Days to Sell of 37 days is less than the 10-year average for May which is 40 days. There were 19 weeksof inventory in May 2022 which is 8 weeks more than the same time last year.
Regional Analysis - West Coast
“The West Coast was the only region in May to achieve a record median. Up 30.8% year-on-year, the West Coast saw its median price climb to $395,000. Whilst sales counts decreased significantly when compared to this time last year, properties are selling faster.
Both inventory levels and new listings increased and according to agents in the region, Hokitika showed good demand for high end properties. Anecdotally, in the Buller District, the sales reflected the current listings in that most activity was in the lower to middle end properties.” (REINZ)
The current Days to Sell of 30 days is much less than the 10-year average for May which is 74 days. There were 25 weeks of inventory in May 2022 which is 8 weeks more than the same time last year.
Regional Analysis - Canterbury
“Canterbury’s median house price increased steadily to $685,000 — an 18.1% increase year-on-year. AshburtonDistrict reached a record median of $518,000, surpassing its previous record set in October 2021. As in most regions around the country, owner occupiers dominated the overall buyer pool. First home buyers and investors have backed away due to tightened lending criteria. Vendors’ expectations have become realistic — particularly for cash buyers. According to Cantabrian agents, good quality properties are selling at auction, with a satisfactory number of buyers bidding on them.
“Whilst the Canterbury market is steady, the most influential forces on it are rising interest rates, economicuncertainty, particularly inflation, and the rising cost of living. People needing to renovate are finding itchallenging with labour and material shortages evident in Canterbury and nationwide. Agents say that thedemand for completed or renovated homes has never been stronger. Despite all this, agents are still seeingan influx of people moving to Canterbury for a better way of life, less commuting and more value for moneyproperty.” (REINZ)
The current Days to Sell of 36 days is the same as the 10-year average for May which is 36 days. There were 13weeks of inventory in May 2022 which is 7 weeks more than the same time last year.
Regional Analysis - Otago
Dunedin City -“Median prices in Dunedin have eased, with the region seeing a 0.9% increase in its median house price year-on-year to $642,000. Dunedin saw a decline in its numbers of investors and first home buyers in the market due to rising interest rates and their ability to secure finance. Despite these factors hindering certain buyers, increased stock levels and less competition have granted some buyers a position of power to negotiate and take the time to find the right property.
“Sales counts saw a small increase when compared to May last year — up 1.8%, but properties are still taking their time to sell. The median days to sell was up 21 days year-on-year from 26 days to 47 days this May.” (REINZ)
Queenstown Lakes -“Prices hold strong in the Queenstown-Lakes District — up 41.5% year-on-year reaching a record median of $1,500,000. Wanaka’s median price climbed 74.2% when compared to May last year, reaching $1,700,500. Owner occupiers are the most active buyer pool in Central Otago/Lakes and those looking to purchase a holiday home are starting to show interest again. Agents say that the market is in a state of adjusting — buyers are taking their time and have a fear of overpaying, and vendors are still needing to reconsider their price expectations to meet the market.
“Agents expect the upper end of the market to continue to perform well with the region a desirable area to live for this buyer segment. Rising interest rates are a concern for all buyer groups and agents await the changes to the CCCFA to be implemented in the hopes it will positively impact buyers’ ability to secure finance and purchase.” (REINZ)
The current Days to Sell of 45 days is more than the 10-year average for May which is 40 days. There were 17weeks of inventory in May 2022 which is 7 weeks more than the same time last year.
Regional Analysis - Southland
“Southland’s median price increased 12.3% on May last year, to $449,000. Supply is outweighing demand in Southland, enabling buyers to take their time when looking for a property. Whilst inventory levels increased 45.6% year-on-year, new listings declined 15.1%. Agents say that vendors are starting to understand the current market dynamics and are adjusting their price expectations accordingly. Attendance at open homes this month was slightly better than April and March, but auction rooms continue to see less unconditional buyers with sales being made post-auction to conditional purchasers.” (REINZ)
The current Days to Sell of 39 days is less than the 10-year average for May which is 41 days. There were 14 weeksof inventory in May 2022 which is 6 weeks more than the same time last year.
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