Housing market sales and prices revived in January

The housing market revived in the traditionally quiet month of January with year-on-year sales volumes lifting for the first time since June 2016.

The Real Estate Institute’s latest data shows there were 4366 homes sold in January, 2.7% more than the 4251 sold in January last year.

Prices are also on the move again with the house price index up 3.4% on a year ago nationwide, although prices in Auckland were up a scant 0.1%.

Excluding Auckland, the annual increase was 6.6%.

The hot spots were Gisborne and Hawkes Bay, up 13.7% on January last year, Southland, up 13.2% and Manawatu/Wanganui, up 11.6%, but no district experienced an annual decline.

Prices in Wellington were up 8% on January last year, up 7.6% in the Waikato and up just 0.2% in Canterbury.

“January can often be a quiet month for the industry as people spend much of their time at the beach or the bach,” says institute chief executive Bindi Norwell.

“However, clearly the warmer weather has helped sales as it’s the first time we’ve seen a positive year-on-year sales increase in 19 months." Ms Norwell.

The institute says auctions were used in 6% of all sales, the same as in January last year, although Auckland saw a 4.4% increase.

More very expensive houses and fewer cheaper houses were sold in the latest month.

Houses worth more than $1 million accounted for 11.4% of sales in January this year compared with 10.5% in January last year.

And 47.3% of sales were of houses worth less than $500,000, down from 51.4% last year.

Days to sell lengthens
Despite the greater sales volume, it’s taking longer to sell houses.

Nationally, it took five more days at 46 days to sell a house in January this year than in the previous January.

Westpac chief economist Dominick Stephens says the housing market figures can be choppy on a month-to-month basis, particularly around the holiday season so he isn’t reading much into the latest numbers.

“The housing market is still best characterised as enjoying a bit of a resurgence at present following a drop in mortgage rates in late 2017 and the passing of the election,” Mr Stephens says.

“With fixed mortgage rates falling further in recent weeks, and the Reserve Bank slightly easing its loan-to-valuation mortgage lending restrictions, we expect the current market buoyancy to continue for a few more months,” he says.

“However, later this year we would expect fixed mortgage rates to start increasing and the government’s policy programme of cooling the housing market will bear on the market.”

ASB economist Kim Mundy agrees. “Although election uncertainty has eased, the housing market is still facing a number of disruptions from legislative changes which we think will continue to weigh on activity and price growth over 2018.”