Housing market revival continued in March outside Auckland

The housing market continued to revive in March with annual house price inflation, excluding Auckland, reaching 7.2%, up from the 6.9% pace in the year ended February.

House prices in Auckland rose 0.4% in the month of March, a step down from the 1.4% increase in February, taking the annual increase in New Zealand’s largest city to 1%, according to the Real Estate Institute’s latest house price index data.

Including Auckland, the national annual increase was 4.2%.

However, the number of properties sold in March totalled 7768 across New Zealand, down 9.9% from March last year, which was the highest month for sales in 2017.

Property sales in Auckland were down 12% year on year at 2386 while Wellington’s year-on-year sales were down 17.7% – annual house price inflation in Wellington eased a little to 9.1% from 9.5% in February.

Regions showing double-digit house price inflation include Gisborne/Hawkes Bay, up 14.1%, Manawatu/Wanganui and Southland, both 11.4%, and Tasman/Nelson/Marlborough/West Coast, up 10.1%

The median number of days it took to sell a house in March rose a day to 34 days compared with March last year but was 10 days fewer than it took in February this year.

“Regional New Zealand appears to be enjoying its time in the spotlight,” ASB Bank Bank economist Kim Mundy says.

“While we may be seeing some signs of a regional catch-up following strong price growth in New Zealand’s larger centres over the past years, we still expect volatility to remain a key theme in the housing market until greater policy clarity emerges,” Ms Mundy says.

She notes the national fall in sales volumes was driven by declines in Auckland, down 5.8%, Wellington, down 8.8%, and Otago, down 7.6% but activity rose in other regions.

“The tug-o-war between stretched affordability/legislative changes versus still-strong population growth and low housing supply looks to have continued,” Ms Mundy says.

“We expect the situation to persist until greater clarity over the impact of the new government reforms emerges – this could be some time away.”