House price values and sales boosted by late spring surge
14 Dec 2010
A late spring surge in the residential property market has lifted the level of sales back above 5,000 and the national median price up to $360,000, according to the Real Estate Institute of New Zealand (REINZ) November report.
The latest REINZ Monthly Housing Price Index also reported a 1.9% rise in house prices, the biggest increase since September 2009 and coming after two months of falls.
"The indications of a lot more listings noted at the beginning of last month have led to a late flush of spring activity," said REINZ spokesman Bryan Thomson.
"With pent-up levels of people now in the market who need to buy or sell homes, we can expect the increased activity to continue through December and the summer without the usual slowdown over Christmas."
"The November results may mark a turnaround in housing market activity, although more evidence is needed before jumping to any such conclusions," said JP Morgan economist Helen Kevans.
She said that demand from property had weakened considerably since the introduction of new tax measures in May which prevented property investors from offsetting their losses against income and other taxes.
Kevans said there has been some positive developments in the property market in recent weeks, with mortgage approvals and new listings both up and the latest QV indicators showing prices appear to be stabilising.
Despite these positive indicators Kevans remains unconvinced house prices will avoid further falls.
She cites the backlog of unsold property on the market as one reason, and the fact that "households are realigning their spending patterns and consolidating their balance sheets, which have historically been too leveraged to housing debt, meaning the property investors will not be re-entering the market in droves."
Westpac said that while the figures showed a strong rebound and gave "a sense that sentiment has turned in the housing market" it did note the increase has come from a very low base.
"After recording the lowest number of house sales in any month for nearly a decade in October, sales rallied in November lifting a whopping 20% in seasonally adjusted terms."
"Still, at current levels, sales remain at reasonably low levels and are still 15% lower than a year ago."
ASB economist Chris Tennent-Brown said that while the housing market remained weaker than a year ago, "the pick-up over November provides some comfort that the market is not deteriorating further."
However he did caution that the high level of inventory on the market and the long average time to sell continued to tip the market in favour of the buyer, adding "we continue to expect softness in prices over the months ahead, with prices down around 3% on year-ago levels, and around 5% off the 2007 peak."
Total dwelling sales rose from just 3,903 in October to 5,138 in November, rising above the 5,000 mark for the first time in five months. However the increase in sales has been off a low base and is less than the 6,056 sales in November 2009 though up on the 4,279 sales in November 2008.
The national median price rose from $350,000 in October to $360,000 last month, also an increase on the November 2009 figure of $355,000 and almost matching the record national median price of $360,500 in March 2010.
Reflecting increased buyer interest, the national median number of days to sell has shortened again to 40 from 41 in October and 43 in September and August.
"With sellers coming to terms with current market prices and buyers reassured about the long term stability of interest rates, confirmed last week by the Reserve Bank Governor, we can look forward to more positive levels of real estate market activity than we have seen over the past six or eight months," Thomson said.
Nationally the total value of residential sales, including sections, increased from $1.67 billion in October to $2.26 billion in November. The breakdown of the values of the properties sold is 204 for $1 million plus, 663 between $600,000 and $999,000, 1275 between $400,000 and $599,999 and 2,996 for under $400,000.