Less heat in housing market

Queenstown volumes and values down; view of Queenstown Hill, foreground, Queenstown Bay and the...
Queenstown volumes and values down; view of Queenstown Hill, foreground, Queenstown Bay and the suburb of Fernhill beyond. Photo: Guy Williams.
Median house prices across Otago continue to show  annual gains, but cracks are appearing in the previously buoyant Queenstown Lakes district where both volumes and prices are down.

The number of houses throughout the country that sold for more than $1 million plunged almost 30% from 1099 in June last year to 799 last month.

Against last year, sales volumes across the country continued to decline; nationally down 24.7%,  Auckland down 33.2%, Otago down 17.8% and Queenstown Lakes down 34%.

REINZ chief executive Bindi Norwell said June’s data showed "all the signs of being a two-tiered market" — Auckland’s median price increasing 2.5% from a  year ago, but the rest of country, excluding the Auckland input, seeing growth of 11.4%.

Just as the Reserve Bank’s loan to value ratio (LVR’s) restrictions are biting around high-priced Auckland, where investors must have a minimum 40% deposit, the LVR’s appear to be having a similar effect around Queenstown, as banks scrutinise borrowing levels.

The monthly data of the Real Estate Institute of New Zealand now includes Queenstown within the wider Otago data, which has raised median Otago prices.

While Otago’s median price rose 12.6% from June last year, by $43,000 to $385,000, Queenstown booked a 1.7% decline to $860,000, and its volumes were hard hit, down 34% from 88 properties a year ago to 58.

May to June, Queenstown saw a 2.4% price decline and a 42.6% volume decline, from 101 homes to 54.

Queenstown Lakes REINZ regional director Gail Hudson said the Queenstown and Central Otago markets appeared to be "more dominated by the attitude of the banks" and their lending outlook, than any other factors.

"The overall pricing trend for those areas was stabilising, compared with the strong run of rising prices through 2015 and 2016," Ms Hudson said.

"In other parts of the region the low levels of inventory are impacting on buyer demand," she said.

REINZ’s regional commentator for Dunedin Liz Nidd said Dunedin had a "dire shortage" of listings and the city’s gain to a $360,000 median price reflected the lack of new stock and high demand.

"We wouldn’t expect to see any major change for this [July] month, with school holidays under way," she said.

Westpac acting chief economist Michael Gordon said the REINZ data pointed to a "substantially softer" housing market in June.

"While the slowdown was originally concentrated in Auckland, it’s now spreading to a greater number of regions,’’ he said.

In seasonally adjusted terms, Mr Gordon said sales fell sharply, much more than just the usual winter lull.

"Sales fell in both Auckland and the rest of the country in roughly equal measure," Mr Gordon said.

ASB economist Kim Mundy said seasonally-adjusted house sales fell across many regions in June, including Auckland.

"However, seasonally-adjusted median days to sell remained flat, suggesting that demand has not evaporated from the market entirely," she said.

That was also reflected in prices, which had only seen "soft falls", despite annual sales growth being negative for the past 12 months, she said.

"We expect to see activity and price growth remain subdued over 2017, especially in Auckland where prices are most stretched," Ms Mundy said.

Three areas around the country booked record median prices in June: the Bay of Plenty at $555,000, Manawatu-Whanganui at $280,000 and the Tasman district, at $486,000.

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