South Island house prices rise as North Island falls and national sales drop 11.6%
Every South Island house price index rose in the year to September, while North Island measures fell. The figures come from Real Estate Institute of New Zealand (REINZ) data, reported by MPA.
The national figures were weaker. Sales fell 11.6% from September last year, to 5,752. The REINZ House Price Index (HPI) slipped 1.5%, and the national median price fell 2.3% to $755,000. Outside Auckland, the median barely moved, at $691,200.
Southland led annual HPI growth for the 14th month running, up 7.5%. Canterbury was next at 3.1%, then Otago at 2.8%. Central Otago District and Invercargill City both set record median prices.
Auckland's median price fell 2.6%, and the city accounted for more than half of the national drop in sales. Wellington is still the weakest HPI series over the year, down 4.5%, even after a 1.1% rise in September.
Taranaki doesn't fit the pattern. Its median price rose 11.4% to $620,000, the biggest gain among the six of 16 regions where medians went up. MPA's report says all North Island measures fell, and it doesn't explain how Taranaki's median squares with that. The price index allows for the mix of homes sold, while a median can swing with whichever houses happened to sell that month.
More homes to choose from
Buyers have more choice than a year ago. MPA reported that inventory rose 10.7% to 34,001 properties, the 14th month in a row that stock has been higher than a year earlier. New listings rose just 0.8%.
In Auckland and Wellington, inventory has grown year on year for 32 straight months. Southland went the other way, with stock down 8.4%.
Homes took a median 46 days to sell, three days longer than a year earlier but six fewer than in August. Seasonally adjusted sales fell 4.3% from August, so the usual spring lift hadn't arrived yet.
"Activity is continuing, but decisions are not being rushed," REINZ chief executive Lizzy Ryley said, as quoted by MPA. "Where buyers have more choice, some are taking time to research their options." She also said: "Conditions are not moving in one direction."
Agents reported that some buyers and sellers were waiting until after the November election, according to MPA. Cost-of-living pressures, job worries and global uncertainty were keeping other buyers cautious.
Rates are going up
The Reserve Bank raised the official cash rate (OCR) by 25 basis points to 2.75% on 2 September. REINZ said banks passed the full rise on to floating mortgage rates, while changes to fixed rates were more mixed.
The banks expect more rises, but they disagree on how many. ASB expects two more hikes, taking the OCR to 3.25% by December, MPA reported. Westpac expects the Reserve Bank to hold in October, then raise the rate to 3% in December. Westpac has also cut its house price forecast. It now expects national values to fall 1.4% this year, where it had previously expected a rise.
REINZ members expect the market to stay stable in the near term, with perhaps more activity before the summer break.
What it means for a first-home buyer
A first-home buyer in Auckland or Wellington is shopping in a market where stock has grown for more than two and a half years and prices are lower than a year ago. Homes are taking longer to sell, so there is usually time to compare houses, get building reports done and negotiate. Don't read too much into Wellington's 1.1% rise in September; it's one month against a year of falls.
In Southland, conditions are close to the opposite. There are 8.4% fewer homes for sale than a year ago, prices are up 7.5%, and Invercargill has just set a record median. Buyers there have fewer options and less reason to expect prices to drop while they wait. Canterbury and Otago are rising more slowly but are still going up.
Interest rates are the same everywhere. Anyone on a floating rate, or with a fixed term ending soon, is already paying the September rise. If ASB is right, two more rises are coming by December. If Westpac is right, there's one. Before the Reserve Bank's October decision, buyers can check what their bank's preapproval assumes about rates, and how much a 0.5 percentage point rise would add to their repayments.