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Housing market cooling rapidly

House prices and sales are down, the latest REINZ data shows.

Wednesday, February 16th 2022, 10:13AM

by Sally Lindsay

The national median selling price dropped to $880,000 in January down by $20,000 compared to December’s $900,000 median.

It was the second month in a row it had dropped from its November peak of $920,143.

Auckland bore the brunt of the price fall, where the median selling price dropped by $80,000 from $1.28 million in December to $1.20 million in January.

Across the rest of the country, excluding Auckland, the median price dropped by $10,000 to $750,000 in January.

Four regions bucked the trend. Median prices in Northland, Bay of Plenty, Taranaki and Otago were all higher in January than they were in December.

Kiwibank senior economist Jeremy Couchman says 2022 is going to be a challenging year for property.

In the latest figures there were some regional exceptions to the national trend.

“For instance, house price growth eased 1% in Canterbury to still record a heady 32.7%.

“Northland stood out in January as the only region to see annual house price growth actually increase. Growth hit 28.3% from December’s 27.1%, although growth is still down from September’s high of 33.6%,” says Couchman.

“The regions that underscored the excesses of last year now have the fastest falls in growth. Wellington’s house price growth has plummeted to a mediocre 12.2% - that’s mediocre by recent standards.

Sales decline

Property sales across the country dropped dramatically in January, down to 3,665 houses changing hands compared to 5,135 sales in January last year, the latest REINZ data shows.

Sales were the lowest for a January month in 11 years. And 11 years ago, the market was still recovering from the GFC.

The drop of 28.6% over the year highlighted a weaker trend than would be expected for the first month of the year. Month-to-month it was a 5.3% drop.

Sales of New Zealand homes, excluding Auckland, dropped 26.4% annually from 3,184 to 2,342.

In Auckland the number of properties sold dropped 32.2% annually — from 1,951 in January last year to 1,323 in January this year.

In terms of the January month, it was the lowest sales count since records began in 1992 for Nelson, Otago, Taranaki and Manawatu/Whanganui, and the lowest for Tasman since 2000.

REINZ chief executive Jen Baird expects expect sales volumes to increase as during February and March. “However, this does depend on reasonable levels of new listings.”

The REINZ house price index (HPI) also recorded back-to-back monthly falls following an unprecedented run of 18 consecutive price gains.

The HPI fell 1.5% at the start of this year, and annual house price growth slowed further to just below 20% - that’s from a record high of 30.6% as recent as August.

The figures are reflective of the usual slowing down of sales over the holiday period, but also magnified by headwinds such as LVRs, the CCCFA and interest rates impacting the number of active buyers in the market, says Baird.

Kiwibank says an ongoing lack of listed property is likely behind the ongoing below-average time to sell. According to realestate.co.nz data, the total available listings is only slowly starting to lift from recent record lows. And total listings remain low by historical standards.

“Nevertheless, the stock of listed property for sale will continue to grow as activity cools, says Couchman.

“The scarcity of listed property was a feature of the market last year but will be less so for this year. Rising supply and choice for buyers will add continued downward pressure on house price growth over the year.”

Not all the REINZ data was soft. The median number of days to sell, seasonally adjusted, slipped by one day to 32 – and still well below the historical average of 39 days.

Screws tightening

Westpac acting chief economist Michael Gordon says the screws have been tightening on the housing market in recent months.

“Most importantly in our view, fixed-term mortgage rates have risen sharply since September, in anticipation of the OCR hikes the Reserve Bank will deliver over the next couple of years.

He says a  tightening of loan-to-value limits and new responsible lending requirements are also weighing on housing demand right now. “However, we suspect that these will be more short-lived factors while the new rules are being bedded in.”

“We’ve long been predicting a turn to moderate house price declines as mortgage rates rise from their lows. The timing of that turn has always been up in the air, and it now looks to be coming sooner than we had assumed. That will have a bearing on the outlook for consumer demand this year, and in turn the extent of the OCR hikes that will be needed to keep inflation in check.”

Tags: price fixing

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Lender Flt 1yr 2yr 3yr
AIA 5.35 4.49 5.25 5.55
ANZ 5.54 5.15 5.85 6.15
ANZ Blueprint to Build 2.78 - - -
ANZ Special - 4.55 5.25 5.55
ASB Bank 5.35 4.49 5.25 5.55
Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
Bluestone 5.29 7.49 7.59 -
BNZ - Classic - 4.55 5.25 5.45
BNZ - Mortgage One 5.55 - - -
BNZ - Rapid Repay 5.55 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.55 5.35 5.94 5.99
BNZ - TotalMoney 5.55 - - -
CFML Loans ▲6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.70 5.20 -
Heartland Bank - Online 4.00 3.85 4.70 4.84
Heretaunga Building Society 5.95 4.80 5.50 -
HSBC Premier 5.49 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.25 ▲4.29 ▲5.09 ▲5.35
Kainga Ora ▲5.43 ▲4.57 ▲5.58 ▲5.85
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 5.00 5.55 6.19 6.39
Kiwibank - Offset 5.00 - - -
Kiwibank Special 5.00 4.55 5.19 5.39
Liberty 4.84 - - -
Nelson Building Society 5.95 4.95 5.85 -
Pepper Essential 3.44 - - -
Resimac 4.59 5.60 6.16 6.29
Lender Flt 1yr 2yr 3yr
SBS Bank 5.29 4.69 5.35 5.49
SBS Bank Special - 4.19 4.85 4.99
Select Home Loans 4.09 4.29 4.86 5.09
The Co-operative Bank - First Home Special - ▲4.19 - -
The Co-operative Bank - Owner Occ 5.45 ▲4.29 5.19 5.45
The Co-operative Bank - Standard 5.45 ▲4.79 5.69 5.95
TSB Bank 5.59 ▼5.14 6.05 6.15
TSB Special 4.79 ▼4.34 5.25 5.35
Unity 5.65 ▲4.80 ▲5.50 -
Wairarapa Building Society 5.24 4.55 5.20 -
Westpac 5.54 5.09 5.79 6.09
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

Last updated: 16 May 2022 9:03am

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