NZ regional house markets weaken

The regional housing markets in New Zealand have weakened in terms of sales of dwellings, average house prices, and how long properties were taking to sell, according to the latest Regional Property Insights, which looked at the latest data provided by REINZ.

The report, sponsored by First Mortgage Trust, said dwelling sales nationwide have fallen 29% in the past year to just 59,900 – the lowest annual total sale since 2012 – and have eased by 14% in the past three months, in seasonally adjusted terms, due to the record tightening of monetary policy and Reserve Bank prediction of recession.

Average house prices nationwide dropped 14% in the three months to February from a year ago and were now in slightly below trend territory.

“The correction in prices from highly overvalued levels has been quite brutal – just as the surge in prices during the pandemic was quite extreme,” said Tony Alexander (pictured above), independent economist and report author.

The average time taken to sell a dwelling in the three months to February was 51 – 15 days longer compared to the prior year and the slowest rate of turnover since shortly after the GFC.

Northland

The Northland housing market has cooled off to a greater-than-average degree, with only 120 properties sold in the region in February. For the three months to February, sales were down 40% from the prior year and the seasonally adjusted change from three months earlier was a fall of 22%.  Dwelling prices in the three months to February, meanwhile, were less weak, just down 10% from a year earlier.

“One factor likely explaining the relatively greater weakness in sales will be the flooding at the end of January,” Alexander said.

On average, selling a dwelling in Northland took 61 days in the three months to February.

Auckland

In Auckland, real estate sales in February numbered 1,049. And while this seemed a lot compared with other regions, it was relatively weak considering that the city accounted for one-third of the population, Alexander said.

Sales for the February quarter dropped 39% from a year earlier compared with a 29% decline for the rest of the country excluding Auckland. The annual sales of 19,200 were now not far from the record low of 16,100 in early 2009 during the GFC.

Weakness in Auckland’s real estate market can also be observed in sales prices, which fell 17% from a year earlier, and in the average number of days taken to sell a dwelling, rising to 10 days longer than average in the three months to February, or 49 days.

Bay of Plenty

The Bay of Plenty region is experiencing a greater-than-average decline in sales, with the number of properties sold in the three months to February down 38% from a year ago. The seasonally adjusted change from the previous quarter was a decline of 19%. Compared with a year ago, average prices in the three months to February were down by 13%, while the number of days taken on average to sell a dwelling has increased by a firm 23 days from a year ago.

Waikato

The number of dwellings sold in the Waikato region in the February quarter fell 36% from a year ago. House prices, meanwhile, were down by 10% from a year ago but remained well above trend levels with the country overall. It took an average 59 days to sell a dwelling in the Waikato region in the three months to February, 18 days longer than average.

Gisborne

The number of dwellings sold in Gisborne in February was just 28, compared with 46 a year ago, impacted by recent extreme flooding. Sales for the three months to February were down 45% from a year ago and have weakened by 27% in the past three months, in seasonally adjusted terms. Average prices fell by 11% in the three months to February from the prior year.

Hawke’s Bay

The Hawke’s Bay region has also been heavily impacted by recent extreme weather. In the three months to February, sales in Hawke’s Bay were 27% down from a year earlier while annual sales numbered 1,880 – not far above the record low of 1,790 seen in 2011 shortly after the GFC ended.

Prices in the latest quarter dipped by 12% from a year ago but remained well above the long-term trend with the country overall. It took an average of 55 days to sell a dwelling in the region in the three months to February, 12 days longer than the prior year.

Manawatu-Wanganui

The annual number of dwellings sold in the Manawatu-Wanganui region was 2,845 – just above the

post-GFC low of 2,717 in early 2011. Sales in the three months to February were 15% lower compared to a year ago, and 7% off from the previous three months in seasonally adjusted terms.

With regard to prices, there was a 15% decline in the three months to February compared to a year ago, but with average prices still well above trend compared with the country overall.

In the most recent quarter, it took an average 50 days to sell a dwelling in the region – 12 days longer than a year earlier.

Taranaki

In Taranaki, sales of dwellings in the three months to February were 25% down from a year earlier and the seasonally adjusted decline over the quarter was 8%.

Price-wise, Taranaki region saw a 6% dip from a year ago compared to a nationwide decline of 14% – an out-performance Alexander said was unsurprising considering that the region’s prices on average were only just above trend compared with the country overall.

The average number of days being taken to sell a dwelling in the Taranaki region was 19 days longer than a year ago.

Wellington

The market for real estate in the Wellington region has recently been unusually weak. From the unsustainably high levels during the pandemic, house prices fell steeply, down 21% from the prior year in the three months to February. The February quarter also posted annual sales of 6,058 dwellings, which were the lowest on record.

Average dwelling prices in the Wellington region, meanwhile, were 21% down from a year earlier, with average prices now down 22% from the late-2021 peak – the greatest decline of all regions and equal to Auckland.

On average, in the three months to February it took 58 days to sell a dwelling in the Wellington region – that’s 20 days longer than average.

Nelson, Tasman, and Marlborough

In Nelson and almost in Marlborough, the number of dwelling sales over the past year has been at a record low; while sales in Tasman, at 664, remained well above the record low of 307 due to the unique profile of sales levels in the region. In seasonally adjusted terms, sales fell by a relatively small 5% in Tasman, 12% in Nelson, and 18% in Marlborough over the three months.

The number of days to sell a dwelling increased by 26 days in Nelson, 23 in Marlborough, and 23 in Tasman for the past three months on average versus a year ago.

West Coast

In the year to February, sales declined on the West Coast to 406, from 562 a year ago, with sales down in seasonally adjusted terms by 10% in the three months to February. The same quarter saw house price inflation shifting to -9%, while the average number of days to sell a dwelling increased by 13 days from a year ago.

Canterbury

In Canterbury, the number of dwellings sold over the past year has decreased by 24% to 9,400 while the seasonally adjusted decline over the past three months matched the nationwide pullback of 14%. On average, house prices dipped by 7% in the three months to February from a year ago. The number of days taken to sell a dwelling in the region, meanwhile, was 42 – 12 days longer than a year ago.

Dunedin City/Otago

Activity in the Dunedin City housing market was usually weak, with sales of dwellings hitting a record low of 1,730 in the year to February. Sales for the February quarter were down by 17% from the previous quarter, in seasonally adjusted terms. The weakness in sales was not reflected in extra weakness in prices, however, with prices just under 13% from a year ago.

The number of days taken to sell a dwelling in Dunedin City increased to 55 on average in the past three months from 40 a year ago.

Queenstown Lakes

In Queenstown, annual sales in March were 208% above the record low this past year but were only 13% above the lowest level for the past three decades. But sales in the February quarter were down by 33% from the prior year and up 21% compared to the 14% NZ fall, when seasonally adjusted.

“So, while the level of activity is high because of the region’s strong underlying population growth trend, the end-pandemic weakness matches that for the rest of the country,” Alexander said, noting the Queenstown housing market’s uniqueness.

Average prices in the three months to February were ahead by a small 0.5% compared with a 14% fall for all the country, reflecting the reversal of the pandemic-driven loss of tourist dollars since reopening of the borders.

Days to sell have increased by only eight from a year ago.

Southland

Southland, too, has seen activity levels weakening, although this weakness has been less notable, possibly due to the already low level of turnover. The annual number of dwellings sold hit a record low of 1,380 in February, down 25% from the prior year. However, sales in the three months to February were just down 7% from three months earlier compared with a 14% nationwide decline.

The price decline in the region was similarly muted, with prices in the last three months were down an average 5% down from a year ago compared with a 14% decline nationwide.

The average number of days taken to sell a dwelling has risen to 47 in the February quarter, from 30 a year ago, Alexander said.

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