New Zealand house prices rose in May as more properties changed hands, showing the market is buoyant heading into winter, the Real Estate Institute said.
The Reinz house price index - which measures the changing value of property in the market - lifted 3.7 percent to 2,702 from the same period last year as 11 of 12 regions recorded an increase.
The Manawatu/Whanganui region had the highest annual growth rate of 14.3 percent followed by Gisborne/Hawke's Bay up 14 percent, and Southland up 12.2 percent. Canterbury was the only region to record a decline, down 0.9 percent. Excluding Auckland, the index climbed 6.8 percent to a record 2,554.
The national median house price hit a record $562,000 in May, up 5 percent from its year-earlier level and 2.2 percent higher than April, the institute said. Auckland's median price slipped an annual 1.3 percent to $852,000 as fewer properties were sold for more than $1 million. Three regions achieved record median prices in May, with Northland up 6.7 percent to $475,000, Tasman up 16 percent to $612,000, and Manawatu/Whanganui matching its April record of $305,500.
"The record price for New Zealand of $562,000 continues to highlight the buoyancy of the housing market across the country," said Reinz chief executive Bindi Norwell. "Of the 16 regions in New Zealand, 13 saw an annual price increase – five of which were double-digit increases showing that the demand for good property continues unabated. Only three regions saw a year-on-year price decrease – Auckland, Gisborne and Southland.
“The record median price achieved in Tasman has seen the region skip both Wellington and the Bay of Plenty to become the second most expensive region in New Zealand in just a single month highlighting just how popular the region continues to be – even as we head into winter."
Over recent years regulators have stepped in to slow the country's housing market as rising prices were seen as a risk to financial stability. Reserve Bank restrictions on more highly-leveraged mortgage lending and tighter credit criteria being demanded by banks made it more difficult for borrowers, and housing market sentiment had also been weighed on by new government policies to restrict the sale of homes and property to foreign investors. However low-interest rates and high migration continue to underpin demand as supply remains tight.
"The overall housing market outlook remains finely balanced," ASB Bank senior economist Mark Smith said in a note. "Stretched affordability in an increasing number of regions, higher global interest rates and the risk of further government action continue to run head-to-head with strong demand fuelled by population growth and current housing shortages.
"We expect that the nationwide housing market will continue to tread water over the remainder of the year. It would take a pronounced slowing in the residential property market and lending growth to trigger further relaxation in the RBNZ loan to value restrictions for housing lending. This still looks a little way off."
The number of houses sold climbed 1.3 percent to 7,578 in May from the same month a year earlier, with nine out of 16 regions recording an increase in sale volumes. The largest increases were recorded by Nelson, up 25 percent, the West Coast, up 21 percent to a six-year high, Gisborne, up 16 percent, and Hawke's Bay, up 13 percent. Auckland volumes increased 5.4 percent.
The biggest decreases in sale volumes were felt in Tasman, down 17 percent, Marlborough, down 10 percent, Otago, down 7.4 percent, and Northland down 6.6 percent.
Norwell noted that the number of properties sold had increased in four of the five months of 2018, compared with volume decreases through 2017.
The median number of days to sell a property nationally increased by one day to 38 in May compared with a year earlier, and was two days more than in April.
The number of auctions, which is generally an indicator of a heated housing market, shrank to 12.7 percent of all sales across the country from 13.3 percent a year earlier. In Auckland, 21.1 percent of properties were sold by auction, down from 24.3 percent a year earlier.
The national inventory increased 1 percent to 24,477, buoyed by a 29 percent increase in Nelson, an 8.9 percent expansion in Hawke's Bay and an 8.8 percent lift in Waikato. Auckland's inventory increased by 4.6 percent with an additional 400 properties. The Wellington region still has the smallest inventory across the whole country with only eight weeks’ inventory available to those looking to purchase in the area.
Across the country, the bottom end of the market accounted for a smaller proportion of sales in the month, with houses sold for less than $500,000 at 42.4 percent of all sales, down from 45.6 percent a year earlier, while house sales between $500,000 and $750,000 accounted for 28.4 percent of all sales in May, up from 26.8 percent a year earlier. At the top end of the market, houses that sold for more than $1 million edged up to 14.2 percent of the market versus 14.1 percent a year earlier.