The New Zealand median dwelling price, which started the quarter at $247,000 lifted 5.3% to reach an all-time high of $260,000, while the AMP Home Affordability Index for December declined 7.4%, the third decline in the past three consecutive quarters. While quarterly dwelling sales were down 21%, however, on the same period last year, sales are still historically high when you compare them to normal residential real estate cycles in New Zealand.
“The market had been predicting for some time a drop in the housing market but these figures show that that talk was obviously premature,” AMP Financial Services general manager savings and investments Roger Perry says.
“But, the competition between banks in the two-year fixed mortgage space has now reversed and interest rates are again on the rise, so we would expect to see home affordability continue to decline in the short term. Eventually, however, those higher interest rates will likely slow the increase in house prices as demand settles. We’re already starting to see that slowing now.”
Across the country, the New Zealand Index reflected a 12-monthly decline in home affordability for the ninth consecutive quarter, the steepest annual decline recorded in almost nine years.
Graham Crews, Senior Lecturer in Real Estate at Massey University, says this is due to sustained underlying pressure on the residential property market. “The main drivers have been a strong economy, low unemployment, favourable interest rates, historically high net migration inflow, globalisation of New Zealand property and, in the end, high levels of confidence.“
Residential sales were reported by the Real Estate Institute of New Zealand as showing strong recovery in the month of November. While quarterly dwelling sales of 25,547 were 21% down on the same period last year (32,332), the New Zealand Median Dwelling Price, which started the quarter at $247,000 lifted 5.3% to an all-time high of $260,000 at the end of the quarter.
In terms of regional Median Dwelling Prices, all regions reported a quarterly lift, while all regions except Taranaki recorded a quarterly decline in home affordability. Two South Island regions led that drop. With Southland reflecting the steepest decline at 16.6%, followed by Nelson/Marlborough (14.2%), Northalnd (13.4%), Waikato/Bay of Plenty/Gisborne (12.3%), Hawke’s Bay (11.8%), Manawatu/Wanganui (10.1%), Auckland (7.3%), Otago (7.1%), Wellington (6.3%) and Canterbury/Westland (4%). Taranaki recorded no change.
The New Zealand index reflected a 12-monthly decline in home affordability (15.1%) for the ninth consecutive quarter, the steepest annual decline recorded in almost nine years. Home sales for the past year declined to 107,738, 5.9% down from the yearly total of 114,523 reported in the last quarter. However, sales were still up on the previous year’s (Dec 02 - Nov 03) historical high of 100,218. The Median Dwelling Price moved up 10.6% over the past year from $235,000 to $260,000.
In terms of home affordability, all 11 regions recorded a 12-monthly decline for the second consecutive quarter. Hawke’s Bay ranked highest at 36.7%, followed by Northland (30.1%), Otago (29.8%), Southland (28.6%), Canterbury/Westland (27.9%), Manawatu/Wanganui (27.4%), Taranaki (27%), Waikato/Bay of Plenty/Gisborne (25.8%), Nelson/Marlborough (19.3%) Auckland (15.2%) and Wellington (9.5%).
All regions reported an increase in Median Dwelling Prices over the past year. Hawke’s Bay was out in front with a strong annual lift in house prices of 31.5%, followed by Manawatu/Wanganui at 26.2%. All South Island regions, except Nelson/Marlborough, also moved up strongly. Wellington occupied the lower end of the spectrum at a relatively modest 7.6%.
Southland remains the most affordable region followed by Taranaki and Manawatu/Wanganui in shared ranking for number two position. Auckland remains the least affordable region, followed by Nelson/Marlborough.
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