Auckland house sales pause while regional demand rises: REINZ

by Maya Breen11 Nov 2015

The number of house sales in Auckland took a fall over October, down 4.1% on last month (September) but up 18.6% on October 2014, the latest figures from the Real Estate Insitute of New Zealand (REINZ) show. 

REINZ announced yesterday that nationwide there were 7,838 dwelling sales during October 2015 and excluding Auckland, the number of sales increased 27.5% compared to October 2014, and rose 5.5% on the previous month, September.

REINZ chief executive Colleen Milne says, “The drop in the number of sales in Auckland in October is the result of a softening of demand over the past few months and the new IRD and bank account rules introduced at the start of October. However, the fundamental supply and demand drivers of the Auckland market remain in place, and the result for October is indicative of the market adjustment phase as it adapts to these new requirements.

“Elsewhere across the country we are seeing increasing demand and rising prices as buyers of all types emerge to take advantage of low interest rates. It is further evidence of the ‘halo’ effect of Auckland-based buyers searching for value in regional markets.  During winter and into early spring, the property markets in a number of regions have been far more active than would normally be expected, thus a slowdown or pause is not surprising following this burst of activity.”

Harcourts NZ CEO Chris Kennedy told NZ Adviser they also saw a drop in sales between September and October by 19%, which he attributed to the impending arrival of the bright line test and the 30% deposit requirement for investors in Auckland. 

"But I don’t see that as any reason for panic. Everybody is just adjusting to the new terrain and once they get used to it, they’ll move on and it will be business as usual," says Kennedy. 

"The more important figures to look at in terms of what the future holds are those for new listings and our total stock levels in the Auckland/Northern region – those are both down compared to October 2014 while our total sales for last month were up 3.5% on last year. 

"That suggests there are still a lot more buyers demanding houses in the region than there are sellers – and that will keep seeing strong returns for vendors."

Kennedy says the central region record the biggeest increase in number of auction sales, up 130% from last year, and higher activity in Wellington regions. 

"We have seen an increase in activity in both the Central (which takes in Waikato, Coromandel and Bay of Plenty) and Wellington regions compared to October 2014, with both of those regions recording increases in the number of sales, and in the average house price," he said to NZ Adviser.  

Century 21 New Zealand’s national manager Geoff Barnett has said he’s not surprised to see a softening of the hot Auckland residential housing market in the past month as REINZ statistics show the Auckland region’s monthly median price down three percent after reaching a record high in September.

“I think the Government’s introduction of the ‘bright-line’ test from 1 October has had a measurable impact. Let’s not forget as well as a lot of residential property now being subject to a capital gains tax if sold within two years, non-residents now need to now get a New Zealand bank account and an IRD number before they can invest. That has slowed them down," says Barnett. 

“These measures kicked in on 1 October and subsequently have had a direct and immediate impact on the October residential market in Auckland. There’s now no doubt about that, and the latest REINZ statistics and comments prove it.

“Having said that let’s not forget that the Auckland regional median price for October 2015 is still up 17% from October 2014, but it has come back somewhat from the giddy heights of September."

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