Auckland house prices dip but sales volumes jump

New Zealand house sales rose to an unseasonally high volume in July, although there was a pause in rocketing  prices.

The median Auckland house price fell by 2.6% to $735,000, compared to June, according to the latest figures from the Real Estate Institute of New Zealand.

The number of houses sold in July rose 38% to 8121 in July from the same month a year earlier, the highest number for a July month in 10 years. Auckland was the catalyst with 3160 sales, a 41% gain.

While the median Auckland house price was lower than the previous month, it was the first drop since January. However, it is still about 20% higher than a year earlier.

The national median average rose 3.3% in July to $465,000 for an annual increase of 12%. Stripping out Auckland, the national increase is just 6%.

"The volume of sales has been exceptionally strong for the middle of winter right across New Zealand, with strong year-on-year sales growth in the top half of the North Island and Central Otago Lakes in particular," REINZ chief executive Colleen Milne says.

"Inventory continues to be a significant problem in Auckland, with less than 10 weeks' supply available, and there is an emerging problem of available properties in Northland, Waikato and Bay of Plenty."

The Auckland property market has been a persistent concern for policymakers as record inbound migration swells the population in the country's biggest city.

A lack of building activity in the city, after the collapse of the finance company loans sector last decade, left a shortfall in housing supply. When buyers re-emerged after the global financial crisis, local recession prices soared relative to household incomes – something the Reserve Bank sees as a risk to the wider financial system in the event of a sharp downturn.

To soothe the property market, the central bank imposed restrictions on high loan-to-value ratio mortgage lending in late 2013. Further limitations on lending to Auckland property investors will bite from October, with banks facing pressure from the Reserve Bank to implement the restrictions informally and early.

Stripping out Auckland, the REINZ figures show national sales volumes rose 36% in July from a year earlier, while the median price increased just 6% to $352,000

Sales turnover in Wellington rose 12% to 697 in July, compared with July last year, for a 4.1% increase in the median sales price to $395,750, while Christchurch sales were up 10% July on July to 574 for a 5.6% increase in median sales price to $430,000. Dunedin reported a 9.2% increase in turnover to 155 in July compared to the same month last year, while the median sales price gained 5.8% to stand at $285,000

Just 40% of properties sold in July were below $400,000, compared to 47% a year earlier, while the $1 million-plus bracket accounted for 11% of turnover, up from 6.7% in July 2014.

(BusinessDesk)