West Coast prices reached an all-time record high of $500k – the last region to tip into this price bracket.

Real.estate.co.nz data has shown house prices in all areas across the country rose above $500,000 for the first time. CoreLogic and Barfoot & Thompson’s figures reveal house prices flat-lining, leading both to predict the market is on the way to recovery, although sales and listings are still sluggish.

REINZ says median house prices have increased monthly but declined on an annual basis.

Some of the country’s major banks’ economists have a rosy view of the market and are predicting sizeable rises next year. ANZ expects house prices to rise 4 per cent by the end of the year before moderating next year, while Westpac is predicting an 8 per cent rise next year; Kiwibank says 6 per cent.

Kiwibank chief economist Jarrod Kerr says spring will be the true litmus test for housing. “We’re expecting the buoyancy to continue, because the surge in migration is providing additional demand to an already tight market.”

The 100,000 additional migrants will need “at least” 40,000 houses ... “houses that haven’t been built”.

And those houses might not materialise quickly as the building boom is about to end. The latest Stats NZ building consent figures show over the 12 months to August, 42,110 new properties were consented, down 16.9 per cent compared with the 50,653 consented at the same time last year.

Confidence Boost

However, CoreLogic chief property economist Kelvin Davidson says market confidence has turned, supported by a rough peak for mortgage rates, high net migration flows, a still-solid labour market, and an easing in credit conditions. Barfoot & Thompson managing director Peter Thompson goes further and says the prospect of a healthy recovery in the housing market leading into Christmas looks promising.

CoreLogic’s latest House Price Index shows values across the country flat-lined in September, dropping by a rounded $20, probably ending the 18-month slump. Nationally, average values stabilised at $905,445, compared with $905,466 in August. The three-month change sits at -0.6 per cent. From March 2022’s peak, the total fall has been 13.2 per cent, although average values remain 24.3 per cent higher than pre-Covid in March 2020.

Around the main centres the wider Wellington area was flat in September, with Christchurch and Dunedin edging up by 0.2 per cent each. The most notable main centre was Auckland, where values rose 0.4 per cent – the city’s first increase since March last year.

The signs of a turning point for the main centres were not replicated in Tauranga and Hamilton, where values continued to fall by 1.2 per cent and 1.5 per cent respectively.

REINZ figures show nationally there was a 2.3 per cent increase in the median sale price rising to $785,000 from $767,500 month-on-month, but declining year-on-year by 3.1 per cent. Median sale prices have increased in all but three regions month-on-month, with the West Coast (+16.4 per cent), Marlborough (+13.8 per cent) and Otago (+9.3 per cent) leading the way.

Barfoot & Thompson, Auckland’s biggest residential agency, echoes CoreLogic’s take on house values.

Its data shows the super city’s median sales price for September at $987,000 remained constant and underlines the nosedive in the price cycle has likely run its course.

It’s the second consecutive month the median price has increased and is 3.4 per cent higher than July’s median price of $950,000, the lowest in nearly three years.

The average sales price in September was $1,058,771, down 2.7 per cent on that for August.

Realestate.co.nz’s September asking price figures also closely follow CoreLogic’s data on a lifeless market. It shows prices stayed flat in September at $871,400.

In the main centres Auckland was up 0.4 per cent; Wellington down 0.4 per cent; and Canterbury down 1.6 per cent. Compared to September last year, average asking prices were down 5.3 per cent nationally and by varying degrees in most regions.

Bucking the trend was the West Coast, where average asking prices rose 21.2 per cent year-on-year to an all-time high of more than $500,000 for the first time since records began in 2007. The average asking price in the region in September was $515,183.

The average asking price in Central Otago/Lakes also increased 2.3 per cent year-on-year.

While the West Coast was the last region to tip over $500,000, finding property in NZ for under half a million is still possible.

Sales Bounce Back

Data from REINZ shows sales were 5.1 per cent higher in September compared to the same time last year from 5,174 to 5,439, year-on-year, and up 5.6 per cent for NZ, excluding Auckland, increasing from 3,474 to 3,669 year-on-year. Marlborough had the highest increase in sales, up 66.7 per cent year-on-year. Other regions with increases were Northland (1.8 per cent), Auckland (4.1 per cent), Bay of Plenty (2.8 per cent), Hawke’s Bay (3 per cent), Manawatu/Whanganui (22.6 per cent), Taranaki (16.2 per cent), Tasman (16.4 per cent), Canterbury (13.9 per cent) and Southland (10.7 per cent).

At the end of September, the total number of properties for sale across NZ was 23,564, down 9 per cent (2,339 properties) from 25,903 year-on-year. However, the number rose by 3.6 per cent month-on-month as expected heading into the busier months of the market cycle. Inventory was down year-on-year from 15,744 to 14,690, a drop of 1,054 properties or 6.7 per cent, but increased 4.2 per cent month-on-month. The national median days to sell reduced by seven year-on-year from 47 to 40 days, and three days month-on-month from 43 to 40 days. For a third month, available inventory is now moving quicker (49 days in July, 43 in August and 40 in September).

While September sales look sluggish across the country, Barfoot & Thompson’s 825 sales were the second highest in the past 21 months. While down 6.1 per cent on August’s figures, they were a third higher than in September last year.

Properties valued at under $750,000 figured prominently, with 26.3 per cent of all sales being in this segment of the market, highlighting the growing prominence apartment and townhouse sales are playing in Auckland, and the vastly increased property options available to first-time buyers.

Thompson says the change in emphasis away from stand-alone housing towards multiple properties on a single site has now reached the point where it is lowering the entry point for home ownership for many people.

Listings

More options are on offer with 4,192 properties on Barfoot & Thompson’s books at the end of September. During the month 1,469 new properties were listed, the second highest number this year.

It was different across other areas of the country. Nine of 19 regions monitored by realestate.co.nz had the lowest new listing numbers for any September on record.

Waikato, Gisborne, Hawke’s Bay, Wellington, Otago, Southland, Central Otago/Lakes District, Wairarapa and Manawatu/Whanganui all fell short of typical September numbers. The real estate website says possible Reserve Bank moves and interest rate rises appear to be dampening the influx of listings that warmer weather usually brings to market.

Despite new listings being down last month in most regions, Marlborough was up 3.3 per cent; Auckland up 6.6 per cent; central North Island up 9.6 per cent; Nelson and Bays up 14 per cent; had year-on-year growth in listings.

A big drag on the housing market is the approaching end of the building boom. It’s been revealed in Stats NZ figures, which show the number of new homes consented in August was down 30.3 per cent compared with August last year.

Across the board, 3,170 new dwellings of all types were consented, compared to 4,547 in August last year.

These figures have been declining since the beginning of the year. The biggest drop has been stand-alone houses, down 25.1 per cent in the year to August compared to the previous 12 months, followed by townhouses and home units, down 12.2 per cent, and apartments down 7.2 per cent.

The total value of all types of building work consented in August was $2.472 billion, down 23.2 per cent compared to August last year.

Aucklanders’ Confidence Boost

More and more Kiwis think house prices are past their lows and will increase, ASB’s latest housing confidence report shows.

That shift reflects the broader trends in the data over recent months, with some timely monthly housing market data showing prices first stabilising, and then making tentative gains.

The shift in views has been particularly marked in the city of sails, with Aucklanders now equally split on whether prices will fall further or start to recover. It’s not surprising to see Aucklanders more bullish on price prospects than Kiwis elsewhere – Auckland housing market activity has recovered a little bit more swiftly than elsewhere in Godzone, Nathaniel Keall, ASB economist says.

“The shift in interest rate expectations has been equally swift, with another strong reduction in the balance of Kiwis expecting further mortgage lifts. That said, a chunky proportion of Kiwis still expect further lifts (about 50 per cent) and a chunk of the shift in the net balance has come from an increase in the number of folks who expect rates to remain unchanged, rather than fall. We agree with that sentiment – while the RBNZ may have stopped hiking, it will take some time for the bank to contemplate OCR cuts.”

Keall says Kiwis remain largely split on whether or not now is a “good” time to buy a house. “It’s a tricky environment for many buyers and sellers to navigate. With the market no longer decelerating, the risk of shelling out a load of cash for an asset that quickly declines in value is now less acute. But on the other hand, debt servicing costs remain prohibitive for plenty of prospective buyers and sellers.”

Sizeable Lift

House price expectations underwent another sizeable lift this quarter, continuing a trend we saw last quarter. A net 8 per cent of respondents reported excepting to see a fall in house prices, much less than the net 34 per cent expecting further reductions last quarter – or the net 43 per cent anticipating further price declines at the market’s coolest point in late 2022.

The steady recovery in house price expectations is easy to understand in light of the timeliest data we’ve seen. Recent REINZ data continues to point to an improving housing market, with prices lifting about 1.6 per cent since April, Keall says.

All regions saw a rise in net expectations, but Aucklanders are the most bullish, with respondents no longer expecting a drop in prices in net terms. Aucklanders are evenly split on whether there is likely to be an increase or decrease in prices. That’s also understandable in light of the data: since the trough of the market in Q1, Auckland house prices are up more than the national average (+2.2 per cent).

All-up, Kiwis are increasingly evenly split on the housing market outlook. Roughly a quarter now expect prices to rise, a little under a third expect prices to trend sideways, and another third or so expect further decreases.

Keall says for the bank’s part it is, straddling the former two camps: “we’re expecting the market to continue warming up, but at slower rate. Housing market activity measures are lifting slowly off a fairly low baseline – days to sell is on a downward trajectory, but taking longer to drop compared to the 2020-21 upswing. While housing demand has had a decent boost courtesy of stronger net migration, interest rates remain in very restrictive territory for many prospective buyers.”

What’s Driving House Prices?

House Prices: Recovering

REINZ data shows nationally there was a 2.3 per cent increase in the median sale price rising to $785,000 from $767,500 month-on-month but decreasing year-on-year by 3.1 per cent. Median sale prices have increased in all but three regions month-on-month, with the West Coast (+16.4 per cent), Marlborough (+13.8 per cent) and Otago (+9.3 per cent) leading the way.

OCR: Steady

The Reserve Bank’s official cash rate has been held at 5.5 per cent since July after the RBNZ indicated it was at the end of its tightening cycle, although some economists believe it will rise again at the bank’s November meeting.

Interest Rates: Up

ANZ is offering the lowest six-month fixed mortgage interest rate at 7.09 per cent, while Kiwibank has the lowest one-year fixed rate at 7.19 per cent. Five banks – ANZ, BNZ, Kiwibank, TSB and Westpac are offering the lowest two-year fixed mortgage rate of 6.99 per cent. Four banks – BNZ, Kiwibank, ANZ and Westpac – have the lowest three-year rate of 6.69 per cent.

Building Consents: Down

The number of new homes consented in August was down 30.3 per cent compared to August last year. Across the board, 3,170 new dwellings of all types were consented, compared to 4,547 in August last year. These figures have been declining since the beginning of the year. The biggest drop has been stand-alone houses, down 25.1 per cent.

Mortgage Approvals: Up

August’s new mortgage commitments were $5.8 billion, up 15.7 per cent from $5 billion in July and up 6.8 per cent on an annual basis. This is the first month this year to record a higher value of new mortgages than the same month last year. A monthly and annual increase was recorded across all borrower types. Lending to first home buyers rose to $1.4 billion (up 10.5 per cent from July and 21.7 per cent from August 2022); lending to other owner-occupiers rose to $3.3 billion (up 17.5 per cent from July and 0.6 per cent from August last year); and lending to investors rose to $986 million (up 15.6 per cent from July, and 9 per cent from August last year). The average value of new mortgages across all borrower types rose to $362,500 in August, up slightly from $362,200 in July. The average value has risen1.2 per cent from $358,300 in August last year.

Rents: Up

Stats NZ stock measure shows rents rose 0.3 per cent in September compared with August and were up 4.2 per cent for the year.

Immigration: Up

Stats NZ latest data show population growth from migration is up 28.5 per cent, compared to pre-Covid levels. That compared to a net loss of 4,083 NZ citizens moving overseas. In the 12 months to August the government statistician estimates there was a net gain from migration of 110,200 – an all-time high.