House prices continue to soar in June; expert says predictions of a severe pandemic impact on housing have been disproved

House prices continue to rise

 New Zealand’s median house price reached NZ$639,000 in June, up 9.2% from NZ$585,000 in June 2019, and 3.1% higher than NZ$620,000 in May 2020. Waikato’s median price set a new record.

• Outside Auckland, the median house price rose 3% from NZ$485,000 in June 2019 to NZ$540,000, also up from NZ$530,000 in May.

• Auckland’s median house price rose 2% from NZ$850,000 a year earlier to NZ$928,000, also above the NZ$904,500 recorded in May this year. This was Auckland’s second-highest median price on record.
• Waikato’s median price reached a record NZ$615,000 in June, breaking the NZ$600,000 record set the previous month and marking consecutive monthly records.

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REINZ chief executive Bindi Norwell said: “Earlier this year, there were many predictions that house prices would fall following the COVID-19 pandemic. However, there is currently no evidence of this. Prices in every region are higher than a year ago, and 10 of the 16 regions recorded increases from May.”

“Waikato was the only region in the country to record a new median price high in June, up 17.1% from NZ$525,000 a year earlier. Transactions involving homes sold for more than NZ$500,000 increased 18.3% year on year. There has been a substantial increase in buyers from Auckland, so such a strong rise in the median price is unsurprising,” Norwell said.

Gisborne recorded the country’s largest annual median house price increase, rising 29.4% from NZ$340,000 in May last year to NZ$440,000. Otago and Southland followed, with strong increases of 21.7% and 19.8% respectively, reaching NZ$550,000 and NZ$340,000.

Across Auckland, prices rose year on year in every district except Papakura, where the median fell 7.9%, from NZ$710,000 to NZ$654,000. Auckland City was the only district to record double-digit growth, rising 17.1% to NZ$1,147,500, exceeding its previous record, set in March this year, by NZ$13,500. 

Highest June sales in 4 years 

The number of homes sold nationwide in June increased 7.1% year on year, from 6,184 to 6,625, making it the busiest June for sales in 4 years.

• Outside Auckland, sales increased 2% year on year, from 4,306 to 4,571 homes.
• Auckland’s June sales increased 4% year on year, from 1,878 to 2,054 homes.

After overcoming the negative effects of COVID-19, regions recorded their first year-on-year sales growth in three months in June. Sales increased annually in 10 of the country’s 16 regions.

The regions with the largest year-on-year sales increases were:

West Coast: up 43.2%, from 37 to 53 homes, an increase of 16, making it the busiest June in 14 years;

Southland: up 27.7%, from 155 to 198 homes, an increase of 43, making it the busiest June in 13 years;

Taranaki: up 19.7%, from 147 to 176 homes, an increase of 29;

Waikato: up 14.0%, from 607 to 692 homes, an increase of 85, making it the busiest June in 4 years.

Norwell said sales had not only returned to “normal” levels in June, but had reached their highest June level in 4 years. This suggested the effects of lockdown were now negligible and people could resume their normal buying and selling decisions.

 “With COVID-19 effectively contained in New Zealand, thousands of New Zealanders have returned from overseas, many urgently needing to buy homes for their families. This may have boosted June sales.” However, she also stressed: “This could simply be a rebound following lockdown. With wage subsidies and mortgage holidays ending, and the election approaching in September, the market could dip in a few months.”

HPI shows underlying housing market values remain stable 

REINZ’s House Price Index (HPI) is an important measure of changes in property prices. In June, the national HPI rose 8.6% from June 2019 to 2,991 points.

• Outside Auckland, the HPI rose 5% to 2,982 points;
• Auckland’s HPI increased 7% year on year to 3,002 points. 

The three regions with the highest annual growth were:

Manawatu/Wanganui, up 19.4% annually to a record 3,683 points;

Gisborne/Hawke’s Bay ranked second, up 17.8% annually to a record 3,226 points;

Southland, up 12.2% annually to 3,415 points.

Monthly changes can also help clarify how underlying market values are recovering from COVID-19. The monthly figures show that underlying values remained generally firm and began to recover compared with May, with the national HPI rising 0.9%.

• Outside Auckland, the index rose 8%,
• while Auckland’s HPI increased 9%.

Of the 12 regions, 9 recorded month-on-month growth. The 3 exceptions were Northland (-0.7%), Bay of Plenty (-0.7%) and Otago (-1.0%).

Days to sell fall from the previous month In June, the average time to sell a home nationwide increased from 41 days in June 2019 to 45 days, an increase of 4 days, but was down from 58 days in May.

• Outside Auckland, the average time to sell increased from 39 days in June 2019 to 42 days, an increase of 3 days, but was down from 57 days in May.
• In Auckland, the average time to sell rose from 46 to 55 days, an annual increase of 9 days from 46 days in June 2019, but below the 62 days recorded in May.

Tasman had the shortest selling time at 28 days, down 17 days from a year earlier and 37 days from May. This was Tasman’s shortest selling time for June on record, and it was the only region with an average below 30 days. Overall, 13 of the 16 regions recorded shorter selling times than the previous month. The only three exceptions were Northland (9 days longer than in May), Bay of Plenty (12 days longer than in May) and West Coast (43 days longer than in May). 

Norwell concluded: “After the longer average selling times recorded last month, we expect a gradual return to more normal winter patterns over the coming months, and that trend is already largely apparent.”

Property auctions gradually recover

In June, 733 homes sold at auction, accounting for 11.1% of all property transactions nationwide. This was an increase of 10.0% from 618 auction sales a year earlier, indicating that auction sales had returned to more normal levels after months of restrictions.

Gisborne had the highest proportion of auction sales at 46.3% (25 homes), compared with 26.3% (15 homes) a year earlier. Auckland ranked second nationally, with 21.5% of properties (442 homes) sold at auction, compared with 17.7% (333 homes) a year earlier.

Bay of Plenty followed, with 12.8% of transactions (55 homes) completed at auction, compared with 10.5% (48 homes) in June 2019. 

Housing stock falls for twelve consecutive months In stark contrast to buoyant sales, the total stock of properties for sale nationwide fell from 23,519 in June 2019 to 20,772 in June 2020. This was a decline of 11.7%, or 2,747 properties year on year, and the lowest June stock level on record.

The regions with the largest percentage declines in total stock were:

Taranaki: down 41.8%, from 613 to 357 properties, a decrease of 256 properties; 

Marlborough: down 37.3%, from 311 to 195 properties, a decrease of 116 properties; 

Northland: down 24.5%, from 1,447 to 1,092 properties, a decrease of 355 properties.

Nevertheless, Norwell said the figures showed that “new listings in June this year increased 19.7% year on year, making it the busiest June for new listings in 4 years”. She hoped this would give buyers more choice over the coming months.

Sales shift towards higher price brackets

• Continued increases in selling prices are reflected in the distribution of sales across price brackets, with the national share shifting towards higher-priced properties compared with a year earlier. Homes sold for less than NZ$500,000 fell from 39% of transactions (2,411 homes) in June 2019 to 30.8% (2,041 homes) in June 2020.
• Homes sold for between NZ$500,000 and NZ$750,000 increased from 7% of transactions (1,896 homes) in June 2019 to 32.3% (2,141 homes) in June 2020.
  
  
• The share of premium-market homes sold for NZ$1,000,000 or more increased from 2% (819 homes) in June 2019 to 18.0% (1,191 properties) in June 2020.