With the exception of Auckland, in July 2018 house prices rose all over the country; first-home buyers and Baby Boomers look to the regions; and the newly-passed ‘foreign buyers ban’ received a mixed reception.
Auckland prices slip while all other regions continue to climb
Published: August 2018
Here’s a snapshot of what’s happening in the housing market right now.
According to the latest data from REINZ, in July house prices saw an increase of 6.2% year-on-year, with the median price for the country now being $550,000.
Auckland was the only region to record a minor fall of 0.1%, while Northland, Taranaki, Nelson and Marlborough saw record prices in July. For Marlborough, this was the second month of growth in a row, with a 13.4% increase to $453,500.
REINZ Data also reported that the time to sell a property is steady year-on-year (37 days in July 2018 compared to 36 days in July 2017), and there was a slight increase in the number of houses sold; up 0.7% (+2.1% in Auckland).
“With July producing another four regions with record median prices, we desperately need to increase the supply of new houses - be that through KiwiBuild or from private developers and builders - in order to fill the significant shortage of properties,” said Bindi Norwell, REINZ chief executive.
According to Norwell, first-home buyers should focus on the West Coast, where 55.6% of all houses cost less than $250,000. Nelson is the only area with no properties below the $250,000 mark, while just 1.05% of Auckland properties are valued under $250,000.
“The stability of Auckland’s median price will be welcome news for first-time buyers struggling with Auckland’s house prices. But time will tell whether the low-to-mid $800,000 mark is a longer-term trend,” said Norwell.
Inbound migration flows have slowed down, but the demand-supply imbalance continues to be felt. Economists estimate a shortage of 100,000 houses nationwide, which is higher than the figures released by the Government last year (71,194 houses, of which 44,738 in Auckland alone).
Reserve Bank governor Adrian Orr recently warned that house prices could fall, at least slightly (similarly to the five-percent drop recorded in Sydney). As for the LVR ratios, the RBNZ remains convinced that removing these restrictions could cause lending (and house prices) to rise faster than expected. A decision is expected in mid-October.
The Overseas Investment Amendment Bill (also known as ‘foreign buyers ban’) has officially passed. Existing homes will no longer be available to non-residents, with the exception of Australian and Singaporean citizens/residents. Only new apartments in larger scale developments will be up for purchase.
The new law is expected to have a dampening effect on the housing market, but it is not yet clear to what extent.
According to Kevin Davidson, senior researcher at CoreLogic NZ, foreign investors are a relatively small share of the market, currently accounting for 2.8% of total buyers, and 1.2% of total sellers.
REINZ chief executive Bindi Norwell and Property Institute CEO Ashley Church both expressed the opinion that the impact on buyers will be minimal, while QV general manager David Nagel said that the move may open up new opportunities.
“It’s likely to be a further boost for first-home buyers. With easing competition from investors and migrants already influencing the market, the reduced activity from overseas buyers may add to the opportunity for first-home buyers to gain a larger slice of the pie,” Nagel said.
As for the impact on sellers, the ban may affect the Auckland, Queenstown and Hamilton markets, but be far less noticeable on a national level.
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