Are we seeing the spring bounce?
In good news for borrowers the competitive interest rate environment has continued to offer some great deals. Buyers are also showing some signs of life as we roll through spring with sales volumes rebounding. This is being supported by the low rates, an undersupply of housing in some areas, and the governments tinkering with first home buyer policies.
The spring bounce seems to have arrived with sales nationally lifting 3.3% from the same time last year, notching up a 3 year high for the month of September at the same time, according to the Real Estate Institute of New Zealand (REINZ).
Auckland had been dragging its heels in recent updates, but it's 6.3% increase in sales volumes for September was significantly above the national average of 2.0%.
Just like the spring weather it was not all one way traffic with significant variability between regions.
The numbers compared to September 2018:
- Tasman up 45.8% to its highest September in 3 years.
- Otago up 12% also it's highest September in 3 years.
- West Coast up 11.4% another with a 3 year record for September.
- Southland reversed Augusts 3 year record dropping 27%.
- Gisbourne 20.4% down to their lowest September in 7 years.
- Malbourough dropping 13.9%
Nationally housing inventory fell 7.3% compared to September 2018 with 1673 less properties available for sale which is a bit of a worry for those looking to get into the market, as it could potentially put more upward pressure on prices in certain areas.
Interest.co.nz Greg Ninness and the REINZ both pointed out the number of houses coming to market via auction is still behind the same time last year, while clearance rates remained about the same as the previous months in the mid 50s. Auction prices for September were comparable to last year, with 59% of properties selling for more than their rating valuation.
Another month and another national record high median house price.
REINZ figures for September indicated a jump in median house prices across the country of 6.6% to $597,000 while the House Price Index (HPI) saw a 3.6% jump.
Taking Auckland out of the equation, whose numbers were flat again, the National increase ticks upward to 6.8%.
Auckland values were not creating too many headlines with a muted 0.2% increase to $848,000 from $846,000 for September last year. However, as is usually the case there were significant variations within the city.
The numbers compared to September 2018:
- Manawatu/Wanganui had a strong 24.1% increase to $397,000 up from $320,000 last year in September.
- Southland, might have been slow volume wise but values jumped 22.1% from September last year.
- Taranaki was up 15.9%
- Hawke’s Bay was up 13.4%
- The West Coast continues its downward trend with prices falling 7.5% to $185,000
- Northland was down 5.5% after a strong showing in August.
- Nelson dropped 5.4% to $560,000 down from $592,000.
All but three regions experienced an increase in median values and five regions Waikato, Manawatu/Wanganui, Taranaki, Hawkes Bay and Southland hit all time highs.
Days to sell
REINZ data showed this number coming down again, falling from 39 to 35 between August and September. It was also down on September last year by one day. Auckland was flat with the days to sell remaining 39 the same as September last year.
Manawatu/Wanganui continued to lead the pack with the shortest turnaround for sale, of 25 days. Vendors on the West Coast will be feeling the pinch with average days to sale hitting triple figures, 102 days up 21 days on this time last year.
There has been a lot of conversation about recent and proposed law changes for landlords. There is no doubt being a landlord carries more compliance burden than ever, however rental increases and the low returns of traditional term deposit investments are keeping rental property in investors sights.
Septembers Stats NZ numbers showed a 3.4% increase in rental prices year on year with rents also up 0.2% between August and September.
Where to now?
Spring has injected some energy into the market, benefiting from record low interest rates and recent loosening of lending restrictions on first home buyers and investors.
While there is variability, outside of Auckland things are looking strong particularly in regard to property values.
Volumes have been subdued for some time but it appears they may have bottomed out for this cycle over winter and there are signs the spring pick up could continue albeit constrained a little by a lack of listings in some areas.
The scrapping of capital gains tax proposals and historic low interest rates for term deposits have given property investors some renewed confidence offsetting the impact of recent government policy targeting that part of the market.
Slow and steady growth should be the order of the day but there are still uncertainties associated with plummeting business confidence, slowing economic activity and the pending decision in December by RBNZ around banks needing to hold additional capital on their balance sheets. Should the RBNZ implement the changes as outlined it could push up the cost of lending as the policy is rolled out.
As always, I will continue to keep a finger on the pulse of the current and future economic climate, to keep you up to date with the things that are impacting the lending landscape so you can make better decisions. If you’d like more information, on anything I’ve covered, please don’t hesitate to get in touch.