Property bubble bursts: House sales slump by 20 per cent

Holly Ryan, NZ Herald ,
Publish Date
Fri, 15 Sep 2017, 9:42AM
House sales continue to decline in August. (Photo \ Michael Craig)

Property bubble bursts: House sales slump by 20 per cent

Holly Ryan, NZ Herald ,
Publish Date
Fri, 15 Sep 2017, 9:42AM

The number of properties sold across the country fell by 20 per cent in August, the equivalent of 47 fewer houses sold per day.

The latest data from Real Estate Institute of New Zealand (REINZ) shows a decline in sales in every region - something which has only happened three times in the last seven years.

BNZ chief economist Tony Alexander has issued a stark warning following the slowdown in the market. He told Larry Williams a lot of new people entered the industry as the market went into a boom phase.


Sales in Southland were down 37.3 per cent, Northland was down 29.4 per cent, Taranaki down 25.9 per cent, Waikato down 25 per cent and Auckland down 21.5 per cent compared to the same month last year.

REINZ chief executive Bindi Norwell said banks' lending criteria and loan to value ratios (LVRs) were still impacting first home buyers and investors.

"Again, we've seen the number of properties sold across the country drop significantly. The drop in volume this month meant that, on average, 47 fewer properties were sold each day in August 2017 in comparison to August 2016 - that's a big drop."

Despite this, residential prices across New Zealand increased by 8.2 per cent year-on-year to $530,000 on average.

Excluding Auckland, median house prices increased 10.9 per cent, while Auckland median prices have decreased 1.2 per cent year-on-year.

The increase in regional prices was largely driven by record growth in five regions in August compared to last year.

Southland rose by 22 per cent to $250,000 on average, Nelson increased by 12.6 per cent to $518,000, Hawke's Bay jumped 19.1 per cent to $405,000, Manawatu and Whanganui up 18.8 per cent to $285,000 and Marlborough up 16.7 per cent to $420,000.

"If you looked at the number of properties sold, without looking at the bigger picture, one might assume that the market was showing significant signs of slowing.

"However, as prices are holding up, and even increasing, then it suggests that people may be holding off from selling their property unless it's absolutely necessary."

In August, Nelson exceeded the median house price of half-a-million-dollars for the first time - the fifth region to do so.

The data also suggests that the Waikato is not too far away from reaching this milestone, with four of the last five months having median prices in the $480,000 bracket.

"August has seen a lot happening from a price perspective across the country," Norwell said.

"Property prices increased by 8 per cent in comparison to the same time last year, five regions recorded record median prices and five regions now have a median price 'tag' of more than half-a-million-dollars - all of which are clear indicators of New Zealand's strong regional economy.

"Auckland's median price, although experiencing a slight decreased year-on-year, has remained relatively stable."

The median number of days to sell a property nationally increased by seven days from 30 to 37 compared to August 2016.

Regionally, Waikato saw the biggest increase in the number of days to sell, up 11 days to 39, followed by Northland up 10 days to 47, Taranaki up 10 days to 45 and Auckland up 9 days to 40.

Only two regions saw a decrease in the number of days to sell - the West Coast and Southland.

The number of properties sold by auction also continued to decline across New Zealand with 799 auction sales in August - down 55 per cent on the same time last year.

Auctions now only represent 14 per cent of all sales nationally.