Sales volumes continue to trend down; prices steady in May

16 June 2014

Sales volumes continue to trend down; prices steady in May market

Summary
• 6,572 dwellings sold in May 2014, up 15.9% on April and down 14.8% on May 2013
• All but one region saw sales increase compared to April, however all regions saw declines in sales numbers compared to May 2013
• Canterbury/Westland recorded another record median high in May 2014

REINZ, the most up to date source of real estate data in New Zealand, announced today that there were 6,572 dwelling sales in the month of May, up 15.9% on April, but down 14.8% compared to May 2013. The national median price was $430,000 for the month of May, an increase of $38,000 compared to May 2013, but a fall of $2,250 from April 2014.

Real Estate Institute of New Zealand (REINZ) Chief Executive Helen O’Sullivan says, “The easing trend in the number of sales continues, with all regions recording a decline in sales volume in May compared to 12 months ago, and with this being the second month in a row that we’ve seen this. We would normally expect an increase in sales in May compared to April, however, after taking seasonal factors into account the increase was just 1.6%. This leads us to conclude that the drop in sales in April due to the combination of Easter and ANZAC Day has not created an offsetting increase in sales in May.”

“The weakening trend is also showing up in the number of days to sell with five regions seeing an increase of a week or more in the number of days to sell between April and May. At the national level the number of days to sell is about in line with the 10 year average, however, for a number of regions the result for May is noticeably higher than the 10 year average.”

“While the growth in the national median price is almost 10% compared to May 2013, the driving force for this increase are the Auckland and Canterbury/Westland regions. Together these two regions represent almost 53% of all sales, but contributed 76% of the uplift in the median price. Other regions such as Hawkes Bay, Manawatu/Wanganui, Wellington, Central Otago Lakes, Otago and Southland contributed just 6% of the uplift in the median price, despite representing almost 25% of the national sales total”

Sales Volumes
REINZ data shows there were 6,572 unconditional residential sales in May, a 15.9% increase on sales recorded for April, but a 14.8% fall from May 2013. May is typically the third strongest sales month after March and November, however on a seasonally adjusted basis the level of sales was up only 1.6% compared to April and down 12.6% compared to May 2013.

All but one region recorded an increase in sales volume compared to April with Hawkes Bay recording the largest increase of 35.1%, followed by Waikato/BOP with 28.2% and Southland with 22.9%. Compared to May 2013 all regions recorded a fall in sales volume with Taranaki recording the largest fall of 34.8%, followed by Wellington with a fall of 19.9% and Otago with a fall of 19.3%.

While the total number of sales was down 14.8% compared to May 2013, the number of sales below $400,000 fell by 25.0%. This follows a fall in sales below $400,000 of 31.6% between April 2013 and April 2014. This may be indicative of fewer sales in the lower price brackets since the imposition of the LVR restrictions.

Prices
The national median house price fell by $2,250 (-0.5%), from $432250 in April, to $430,000 in May. Compared to May 2013 the national median house price increased by $38,000 (+9.7%), with seven regions recording an increase in the median price. 66% of the increase in the national median price compared to May last year occurred in Auckland, with Canterbury/Westland contributing 20% of the increase and Waikato/Bay of Plenty contributing 7%. Together these three regions accounted for 93% of the increase in the median price between May 2013 and May 2014.

Canterbury/Westland recorded the largest increase in median price compared to May 2013, with a 15.3% increase, followed by Auckland with a 10.6% increase and Central Otago Lakes with a 7.3% increase. Compared to April, Central Otago Lakes recorded the largest increase in median price, up 10.9%, followed by Hawkes Bay with 5.9% and Canterbury/Westland with 5.1%.

The REINZ Stratified Housing Price Index, which adjusts for some of the variations in the mix that can impact on the median price, is 6.5% higher than May 2013, at 3925.1. The Auckland Index has risen 9.4% compared to May 2013, with the Christchurch Index up 9.0% and the Wellington Index up 1.1%.

Days To Sell
Dwellings took four days longer to sell in May compared to April at 38 days. Compared to May 2013, the median number of days to sell was three days longer. Four regions saw an improvement in the number of days to sell between May 2013 and May 2014, with Central Otago Lakes recording the largest improvement of 30 days. Auckland saw its number of days to sell ease by three days.

For the month of May, Canterbury/Westland and Auckland recorded the shortest days to sell at 34 days, followed by Otago at 40 days, Wellington at 43 days and Taranaki at 44 days. Manawatu/Wanganui recorded the longest number of days to sell at 62 days, followed by Northland and Hawkes Bay with 61 days. Over the past 10 years the median days to sell for the month of May has averaged 39 days across New Zealand.

Auctions
Nationally there were 1,141 dwellings sold by auction in May representing 17.4% of all sales and a reduction of 426 on the number of dwellings sold by auction in May 2013. For the 12 months to March 2014 the total number of sales by auction reached 15,440 or 20.3% of all sales, compared to 14,450 or 18.5% of all sales for the 12 months to May 2013.

Transactions in Auckland again dominated the auction market in March, representing 70.1% of the national total of auction sales. 31.1% of all dwelling sales in Auckland were by auction in May, compared to 38.1% of sales by auction in May 2013. Sales by auction in Waikato/Bay Of Plenty accounted for 9.6% of the national total, Canterbury/Westland accounted for 13.8% of the national total, and all other regions combined accounted for the remaining 6.5% of auction sales in May 2014.

Further Data
Across New Zealand the total value of residential sales, including sections was $3.553 billion in May, compared to $3.09 billion in April, and $3.78 billion in May 2013. For the 12 months ended May the total value of residential sales was $39.55 billion.

The breakdown of the value of properties sold in May 2014 compared to May 2013 is:

There were 980 fewer (-25.0%) sales under $400,000 in May 2014 compared to May 2013, compared to a drop of 1,142 sales (-14.8%) for all price brackets between the two periods.

REINZ Stratified Median Housing Price Index
The REINZ Housing Price Index fell 1.2% compared with April to sit at 3,925.1. Auckland fell 3.1% in May, Christchurch fell 2.3%, and Wellington fell 4.8%. For the 12 months to May, the Auckland Index rose 9.4%, the Christchurch Index rose 9.0% and the Wellington Index rose 1.1%. The National Index increased 6.5% compared to May 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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For more real estate information and market trends data, visit www.reinz.co.nz. For New Zealand's most comprehensive range of listings for residential, lifestyle, rural, commercial, investment and rental properties, visit www.realestate.co.nz - REINZ's official property directory website.

The monthly REINZ residential sales reports remain the most contemporary and up-to-date statistics on house prices and sales in New Zealand. They are based on actual sales reported by real estate agents. These sales are taken as of the date that a transaction becomes unconditional and includes sales as of 5:00pm on the last business day of the month. Other surveys of the residential property market are based on information from Territorial Authorities regarding settlement and the receipt of documents by the relevant Territorial Authority from a solicitor. As such, this information involves a lag of four to six weeks before the sale is recorded by the Territorial Authority.

The REINZ Monthly Housing Price Index is calculated using a technique known as stratification, which provides an averaging of sales prices for common groups of houses. This approach is considered a more robust analysis of actual house price trends and was developed in conjunction with the Reserve Bank.

The REINZ Monthly Housing Price Index is based on a value of 1000 in January 1992, the first month for which electronic information is available. Changes in the index represent movements in housing prices, where the mix of sales between the groups is held constant and are more likely to reflect genuine property price movements.

ENDS

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