LVR Restrictions Impacting Sales Volumes

News Release 12 November 2013

LVR Restrictions Impacting Sales Volumes; Prices Still Rising

Summary

• 6,778 houses sold in October 2013, up 2.1% on October 2012
• New median high price for New Zealand at $407,525, $7,525 (+1.9%) above the previous record high
• Auckland, Canterbury/Westland and Waikato/Bay of Plenty all reach new median high price
• National Stratified House Price Index also reaches new high
• 1,580 houses sold by auction, representing more than 23% of all sales in October
• More than one in five sales were by auction in the 12 months to October 2013

REINZ, the most up to date source of real estate data in New Zealand, announced today that there were 6,778 dwelling sales in the month of October, up 2.1% on October last year and up 0.9% compared to September. The national median price increased $7,525 compared to September to $407,525, a new record median high. Auckland, Canterbury/Westland and Waikato/Bay of Plenty also reached new record median highs in October.

Real Estate Institute of New Zealand (REINZ) Chief Executive Helen O’Sullivan says, “Real estate sales volumes eased back in October following the introduction by the Reserve Bank of restrictions on high LVR lending. Comments by agents from around the country indicate heightened levels of uncertainty for both purchasers and vendors about the impact of these changes, which is causing a number of prospective buyers and sellers to hold off from committing to the market until they are more comfortable.“

“Typically in the real estate market sales volumes change more quickly than prices and overall sales volumes are lower than what we would expect for this time of the year, although in a few regional centres sales are strong. Northland and Otago stand out as two regions with strong sales growth, although in other regions the picture is far more mixed.”

“The full effect on prices of the new LVR restrictions may not show up in the national or regional medians for a few months as buyers with pre-approvals make their purchases and the market adjusts to these new conditions. Three regions hit new median highs in October, and the national median also hit a new high.“

Sales Volumes
REINZ data shows there were 6,778 unconditional residential sales in October, a 2.1% increase on October 2012, and an increase of 0.9% compared to September 2013. On a seasonally adjusted basis the volume of residential sales fell 4.1%, indicating that sales in October were not as high as would be normally expected at this time of year.

Seven regions recorded increases in sales volume compared to October last year, with Northland recording an increase of 25.2%, followed by Otago with 17.5% and Canterbury/Westland with 13.4%. Six regions recorded an increase in sales volume in October compared to September, with Otago recording an increase of 31.9%, followed by Central Otago Lakes with an increase of 17.0% and Manawatu/Wanganui with an increase of 10.2%.

Prices
The national median house price rose by $7,525 (+1.9%), from $400,000 in September, to $407,525 in October to reach a new median high. Compared to October 2012 the national median house price increased by $27,525 (+7.2%), with ten regions recording an increase in the median price. 64% of the increase in the national median price compared to October last year occurred in Auckland and 15% occurred in Canterbury/Westland. Together these two regions accounted for 79% of the increase in the median price between October 2012 and October 2013.

Auckland, Canterbury/Westland and Waikato/Bay of Plenty all recorded new median highs in October, with Auckland reaching $582,000, Canterbury/Westland $380,000 and Waikato/Bay of Plenty $335,000. Compared to October 2012 Central Otago Lakes recorded the largest increase in median price, up 19.5%, followed by Northland with 12.5% and Canterbury/Westland with 10.8%.

The REINZ Stratified Housing Price Index, which adjusts for some of the variations in the mix that can impact on the median price, reached a new high in October and is 9.9% higher than October 2012. The Auckland Index has risen 12.6% compared to October 2012, with the Christchurch Index up 10.8% and the Wellington Index up 0.3%.

Days To Sell
Houses took the same number of days to sell in October compared to September at 31 days. Compared to October 2012, the number of days to sell improved by one day. Eight regions saw an improvement in the number of days to sell between October 2012 and October 2013, with Taranaki recording the largest improvement of 13 days, two regions, Auckland and Otago, took the same number of days to sell.

For the month of October, Canterbury/Westland recorded the shortest days to sell at 24 days, followed by Nelson/Marlborough at 28 days, and Auckland, Otago and Southland at 29 days. Canterbury/Westland’s days to sell are the shortest for that region since October 2003. Northland recorded the longest number of days to sell at 53 days, followed by Central Otago Lakes with 49 days and Taranaki with 43 days. Over the past 10 years the median days to sell for the month of October has averaged 34 days across New Zealand.

Auctions
Nationally there were 1,580 dwellings sold by auction in October representing 23.3% of all sales and an increase of 48.3% on the number of dwellings sold by auction in October 2012. Auctions are increasingly favoured as a sales method in certain centres; for the 12 months to October 2013 the total number of sales by auction reached 16,242 or 20.1% of all sales, compared to 10,950 or 15.2% of all sales for the 12 months to October 2012. Some softening of this rate might be expected in the wake of the introduction of restrictions on low LVR lending.

Transactions in Auckland again dominated the auction market in August, representing 73.0% of the national total of auction sales. 43.0% of all dwelling sales in Auckland were by auction in October; up from the 38.0% of sales by auction in October 2012 but very slightly down from the record 43.8% recorded in September 2013. Sales by auction in Waikato/Bay Of Plenty accounted for 8.2% of the national total, Canterbury/Westland accounted for 10.7% of the national total, and all other regions combined accounted for the remaining 6.2% of auction sales in October 2013.

Further Data
Across New Zealand the total value of residential sales, including sections was $3.45 billion in October, compared to $3.41 billion in September, and $3.15 billion in October 2012. For the 12 months ended October 2013 the total value of residential sales was $39.65 billion.

The breakdown of the value of properties sold in October 2013 is:

$1 million plus 435 6.4%
$600,000 to $999,999 1,249 18.4%
$400,000 to $599,999 1,804 26.6%
Under $400,000 3,290 48.5%
All Properties Sold 6,778 100.0%

REINZ Stratified Median Housing Price Index
The REINZ Housing Price Index increased 1.6% compared with September to sit at 3,839.8.1 to reach a new high. Auckland increased by 0.9% in October, Christchurch rose 0.9% to also reach a new high, and Wellington rose 3.0%. For the 12 months to October, the Auckland Index rose 12.6%, the Christchurch Index rose 10.8% and the Wellington Index increased 0.3%. The National Index increased 9.9% compared to October last year.

* CAGR is Compound Annual Growth Rate
* The Christchurch data needs to be treated with some caution due to compositional changes in the suburb mix caused by the earthquakes in the city

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