WELLINGTON: Property market across New Zealand is marred by a rise in interest rates and falling prices, leading to low transaction activity across the industry.
August market activity was further affected by concerns around rising interest rates by RBNZ and inflation.
However, there are early signs of a spring lift as vendors balance price expectations with reality and traffic through open homes increases, according to the latest data and insights from the Real Estate Institute of New Zealand (REINZ).
Across New Zealand, median prices for residential property (excluding sections) decreased 5.9% annually, from $850,000 in August 2021 to $800,000 in August 2022. Month-on-month, this represents a 1.2% decrease from $810,000 in July.
The seasonally adjusted figures show a 2.1% decrease in the median price as we moved from July to August, suggesting weaker performance than expected.
The median residential property price for New Zealand excluding Auckland remained unchanged compared to last year at $700,000. There was a month-on-month decrease of 2.8% from $720,000.
Four regions had an annual decrease in the median price in August 2022. Auckland’s median price decreased 8.3% compared to August last year, down from $1,200,000 to $1,100,000.
Six of Auckland’s seven territorial authorities (TAs) had a negative annual median price movement in August. Down 13.4%, Waitakere had the greatest decrease, followed by Auckland City where the median price was down 12.3%.
In Wellington, the median price was down 9.3% annually, from $860,000 to $780,000 in August 2022.
Seven of the region’s eight TAs had negative annual median price movements. Carterton saw the median price decrease 25.5%, while Wellington City was down 21.8%. The Manawatu/Whanganui region was down 6.6% from $610,000 to $570,000, and Northland saw a decrease in the median price of 1.2% from $650,000 to $642,000.
All other regions saw annual increases in median price. West Coast recorded the greatest percentage increase in the median price — up 25.0% from $280,000 to $350,000. The median price in Marlborough increased 14.5% from $585,000 to $670,000, and Gisborne saw the median price increase 13.2% from $500,000 to $566,000.
Jen Baird, Chief Executive at REINZ, comments: “In August, we saw the national median property price decrease, down 5.9% compared to August last year. Four of the 16 regions reported annual decreases in the median price. With two of those four regions major markets — Auckland and Wellington — affecting the annual movement in the national median price.
“That said, some real estate agents are reporting an increase in open home attendance. And while owner occupiers remain a dominant force in the market, first home buyers are beginning to re-emerge.
Sales activity down
Across New Zealand, the number of residential property sales decreased annually by 18.3%, from 5,983 in August 2021 to 4,891 in August 2022. Month-on-month, there was an increase of 1.9%. The sales count for New Zealand excluding Auckland decreased 4.2% annually from 3,565 to 3,414. There was a 2.5% increase compared to July 2022.
On August 17, 2021, New Zealand went into a COVID-19 level four lockdown, which is impacting annual comparisons.
Several regions saw an annual increase in sales activity. Gisborne had the most significant increase up 72.7%, from 22 in August 2021 to 38.
Those with the greatest annual percentage decrease were:
- Auckland, which decreased 38.9% annually from 2,418 to 1,477
- Marlborough, which decreased 30.0% annually from 60 to 42
- Waikato, which decreased 18.1% annually from 568 to 465
- West Coast, which decreased 15.0% annually from 40 to 34.
“While affordability and access to finance remain an issue for many, these factors are compounded by rises in mortgage rates, recession fears and high inflation which are also curtailing activity. Vendors are increasingly realistic with their asking prices, however, demand remains dampened due to mortgage rates and continued affordability concerns.
“Agents across the country are reporting that whilst owner occupiers continue to dominate the market, first home buyers are returning indicating there is a pool of interested buyers there,” Baird says.