Real estate sales surge in July, but is this sustainable?
The housing market continues its upsurge, posting record sales numbers in July, according to the latest data from the Real Estate Institute of New Zealand (REINZ).
The number of residential properties sold across New Zealand reached 7,854 last month, a 24.6% year-on-year jump and the highest made in the month of July in the last five years.
In Auckland, July sales were up 30.3% to 2,596 compared to last year’s 1,992, also a five-year record. The rest of the country posted a 21.5% rise in sales, the best July month in sales in a span of 15 years.
All regions, except for Gisborne and Marlborough, registered year-over-year double-digit percentage increases in sales volumes. This is the first time this has happened since April 2016. The biggest hikes were in the West Coast at 57.1% – a 14-year July record, Tasman at 55.7% – 18-year high, Nelson 42.4% – 27-year high, Waikato 34.8% – five-year record, and Taranaki 30.8% – 17-year high.
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The only region not to see a rise in sales was Gisborne, which saw the number fell 38.9% compared to the same period last year.
“Part of the sales volumes can be attributed to post-COVID pent up demand; but underpinning this activity during July was strong levels of interest and engagement from all buyer levels including first home buyers, investors and families looking to upgrade their property,” said Bindi Norwell, chief executive at REINZ.
“Even though anecdotally we’ve had a great start to August, the real question now, is how long this can be sustained for? Particularly now Auckland has gone back into Level 3,” she said.
House prices increase
The national median selling price for July was $660,000, up 3.4% from June and 14.8% from last year. Auckland median house prices remained stable at $920,000, slightly down 0.1% from June but up 11.5% year-on-year. The rest of New Zealand posted a new median selling price record at $559,000, a 3.5% uptick from June and a 15.3% jump from the same time last year.
Record median prices were also achieved in Waikato up 17.1% year-on-year at $615,000, Gisborne up 36% at $483,000, Manawatu/Wanganui an 19.6% increase to $442,500, and Taranaki a 23.9% increase at $446,000.
“July marked 106 months in a row of year-on-year median prices increases for the country and every region in the country saw an increase in median house prices during the month,” Norwell said.
“Even Queenstown-Lakes, which everyone predicted would be one of the most hard-hit regions due to a lack of international tourists, saw a record median price for the district in July of $1,100,000 up from the prior record set in March 2020 of $1,080,000,” she said “It’s a similar picture in Rotorua, where median prices are up 9.4% year-on-year to $487,000. Additionally, Dunedin was predicted to be hard-hit due to a lack of investors, but median prices are up 10.8% annually to $515,000.”
Rising price index
The REINZ House Price Index (HPI), which measures the changing value of property in the market, increased 9.4% year-on-year to 3,021. The figures for Auckland also rose 9.2% to 3,050 while the rest of New Zealand recorded a 9.5% ascent to 2,998.
Gisborne/Hawke’s Bay registered the highest annual growth rate at 15.6%, setting a record index level of 3,231. Southland ranked second rising 13.2% to an index level of 3,429 followed by Waikato with an 11.4% increase to a record index level of 3,262.
This was the first time in two months, but only the second time in two years, that Manawatu/Wanganui was not in the top three regions for the 12-month period.
Both the one- and three-month numbers showed the underlying value of New Zealand’s overall housing market has held up, posting respective increases of 2% and 1.4%, despite the threats brought about by COVID-19 pandemic.
Number of days to sell a property at a four-year low
The median number of days to sell a property nationally in July dropped seven days from 41 to 34 when compared to the same period last year, the lowest in four years. In July, it also took nine days faster to sell a property in Auckland and six days faster in the rest of New Zealand at 33 days, also both four-year lows.
Among all regions, Taranaki properties sold the fastest at 25 days, down 16 days year-on-year and 13 days from last month. Manawatu/Wanganui and Southland both posted the second lowest median days to sell in July with 28 days, down three and eight days, respectively.
The West Coast recorded the longest number of days to sell a property at 56 days, despite this being a 34-day drop from July 2019 numbers. However, this was the region’s lowest in 13 years.
Norwell said that 13 out of the 16 regions posted a median number of days below the 40 mark in July. She added that this was “extremely unusual” but showed “just how quickly the market is recovering from lockdown.”
Auctions doing well
Auctions accounted for 13.8% of all real estate sales across New Zealand in July, with 1,085 properties selling under the hammer. The number is up 8.6% year-on-year and the highest percentage for the month in four years.
About half or 48.5% of the properties sold at auctions were in Gisborne, up from the 31.5% in July 2019. More than a quarter or 26.8% is in Auckland, up 13.6% year-on-year, while Bay of Plenty ranked third at 17.3%, rising from 8.6% last year.
“Every auctioneer we speak to has said how buoyant the market is right now and how unusually busy auction rooms are for this time of the year – both in terms of the number of registered bidders and people just getting a feel for where the market is at,” Norwell said.
Shortage in listings
However, there was marked decrease in the number of properties available for sale in July, with figures dropping 11% from the same time last year. Only three regions saw an annual increase in housing inventory – Hawke’s Bay at 17.6%, Otago at 1%, and Southland at 10.3%.
The regions with the largest percentage decrease in total inventory levels were Taranaki dropping 48.4%, Marlborough down 41%, and Gisborne sliding 29.6%.
Gisborne had the lowest number of weeks’ inventory with seven weeks inventory available to prospective purchasers, the same as last year’s figure. This was followed by Manawatu/Wanganui and Wellington at 10 weeks.
Northland had the highest number of week’s inventory at 44 weeks, up from 36 weeks year-on-year. West Coast placed next with 43 weeks’ inventory available, up from last year’s 41 weeks.
“We’re still not seeing enough new listings come to the market to meet consumer demand right now,” Norwell said. “Hopefully, this will start to change as we move towards the warmer months of the year.”
Price bands
REINZ’s data also suggested that buyers were willing to spend more to purchase a property.
The number of homes sold for less than $500,000 across New Zealand fell to from 39.5% in July 2019 to 28.1% in July 2020, while properties sold in the $500,000 to $750,000 bracket increased from 31.2% to 32.8% during the same period.
At the top end of the market, the percentage of properties sold for $1m or more rose from 13.2% in July 2019 to 19% a year later, the highest percentage for a July month in four years.
