Economy Hub: Early spring as housing market bounces back

The Auckland housing market appears to have bounced into an early spring, showing year-on-year growth for the first time in six months, according to new data from the Real Estate Institute of New Zealand.

The national median sale price rose 3.6 per cent to $549,000, with Auckland prices up 1.4 per cent to $852,000.

Only two regions saw a fall in median price year-on-year – Canterbury with a decrease of 0.5 per cent to $425,000 and Southland with a decrease of 4 per cent to $240,000.

Meanwhile, Wellington continues to boom, with the median price up 16.3 per cent year on year.

The REINZ house price index (HPI) - which economists like because it accounts for changes in the underlying market - showed a more subdued trend.

The HPI increased 4.1 per cent year-on-year to 2,723 a new record high for the country.

The HPI for New Zealand, excluding Auckland, increased 8 per cent from August 2017 to a new record high of 2,610. The Auckland HPI increased 0.2 per cent year-on-year to 2,860.

ANZ senior economist Liz Kendell described it as "a mini comeback from a soft June quarter."

She noted sales increased 1.3 per cent month-on-month, but this comes on the back of
recent softening, and points to price pressures remaining contained or even moderating a little in coming months.

"Overall, housing market pressures look stable, but weakness in the Auckland market persists, while other markets remain tight," she said.

The market was currently pretty well balanced, said Norwell.

The sideways track in Auckland was providing increasing pockets of affordability, while at the same time no one was seeing their values fall sharply.

Areas like the North Shore for example had seen sizable falls in median price largely due to the number of smaller, less expensive units and apartments being built and coming on to the market.

"On the North Shore it went down this month - about 14 per cent year on year - and it's because the number of properties that sold for over $1 million was considerably less."

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While Auckland prices were more subdued than they were a couple of years ago, she didn't expect to see a market slump while supply remained tight.

It was good to see Kiwibuild ramping up, she said. But we'd need to see alot more affordable houses coming onto the market for supply to meet demand.

Meanwhile, while immigration has slowed it was still at historically high levels at a net gain of more than 60,000 a year.

On top of that, the Reserve Bank had indicated that rates could stay on hold for longer meaning we were now seeing banks dropping some mortgage rates - which made it cheaper for people to borrow.

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