House prices in South go against grain

The median house price in Dunedin rose just 0.9% to $642,000 in May, up from $636,000 the year...
The median house price in Dunedin rose just 0.9% to $642,000 in May, up from $636,000 the year before. Photo: Stephen Jaquiery
Otago and Southland have bucked the nationwide house price trend but there are still signs the market is slowing, latest figures reveal.

Yesterday, the Real Estate Institute of New Zealand (REINZ) released its monthly property report which found median prices in the two regions increased while those in the rest of the country decreased.

Nationally, prices fell in May by about 4% and were now off about 6% since their peak last November.

The country’s median price last month was $840,000, up from $820,000 the year before, but down from April’s $875,000.

The median house price in Dunedin rose just 0.9% to $642,000 in May, up from $636,000 the year before.

On a month-to-month basis, prices rose 1.7% from $631,000 between April and May this year.

REINZ regional commentator Liz Nidd said rising interest rates and the ability to secure finance saw a decline in the number of investors and first home buyers in the Dunedin market.

Despite those factors ‘‘hindering’’ certain buyers, increased stock levels and less competition had granted some buyers a position of power to negotiate and take the time to find the right property, she said.

While the number of sales was slightly up on May last year — up 1.7% to 172 properties sold, compared with 169 — properties were still taking time to sell.

The median days to sell was up 21 days year-on-year from 26 days to 47 days last month.

In the Queenstown Lakes area, prices were holding strong, up 41.5% year-on-year to reach a record median of $1.5 million. Wanaka’s house prices had an even bigger jump, up 74.2% to $1.7 million.

REINZ regional director Gail Hudson said owner-occupiers were the most active buyers in the Central Otago and Queenstown areas. People looking for holiday homes were starting to show interest again too, she said.

The market was in a state of adjustment, as buyers took their time and had a fear of overpaying.

Vendors still needed to reconsider their price expectations to meet the market.

The upper end of the market was expected to continue to perform well as the region was a desirable area to live, Ms Hudson said.

Rising interest rates were a concern for all buyer groups and agents were awaiting the changes to the Credit Contract and Consumer Finance Act to be implemented in the hopes it would help secure finance, she said.

In Southland, median prices rose about 12% to $449,000 in the 12 months to May.

REINZ chief executive Jen Baird said supply was outweighing demand in the region, enabling buyers to take their time when looking for a property.

While inventory levels increased about 45% year-on-year, new listings fell 15%.

Attendance at open homes last month in the region was slightly better than April and March, but auction rooms continued to see fewer unconditional buyers with sales being made post-auction to conditional purchasers, Ms Baird said.