Home prices are defying expectations and increasing by almost 30%
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Home prices across the country continued to defy expectations, rising 28.7% to a national median of $ 820,000 in the year through June, according to the Real Estate Institute.
Five of the 16 regions set new median price records, while one region set an equal record and 20 districts set new median records.
Auckland was one of those regions. Its prices rose 25 percent, taking its median price to a new record high of $ 1,150,000 in June.
Other regions to break new records were Waikato (up 19.7 percent to $ 736,000), Taranaki (up 41.5 percent to $ 580,000), Marlborough (up 56.0 percent to $ 705,000), Southland (up 23.2 percent to $ 420,000) and Manawatū / Wanganui (up 35.6 percent to $ 580,000).
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Real Estate Institute CEO Jen Baird said even monthly data showed a slight increase (up 0.3% nationally), and more than half of the regions had an increase from May, which suggested that the market was refusing to cool.
This was confirmed by some very strong results from the Real Estate Institute’s Home Price Index (HPI), which again hit a new high, she said.
“Each region has seen an increase in HPI values ââcompared to the previous month – and the previous three months – which suggests that the market will remain strong for a few more months.”
Buyers hoping to get a good deal during the winter might be disappointed, and Tuesday’s data showed how important it is to address the housing supply issues the country has, she said.
âWe’ve talked about FONFA (the fear of not finding anything) before, but with less than 14,000 properties available for sale, it becomes a real problem in some parts of the country – especially when homes are selling as quickly as they are. ‘they are at the moment. “
Sales were also up, with the number of properties sold in June nationwide increasing 6.2% from the same period last year, from 6,913 to 7,345. This was the highest month June for five years.
In Auckland, the number of properties sold in June increased 29.0% year-on-year (from 2,144 to 2,766), which was the highest for June in 15 years.
Six other regions out of 16 recorded annual increases in sales volumes. These were Northland, Taranaki, Tasman, Nelson and Canterbury.
Baird said the increase in sales came despite the reintroduction of loan-to-value ratios just a few months ago and the announcements in March in an attempt to cool the real estate market, which highlighted the underlying strength. of the market.
âAgent reports across the country indicate that there are still a good number of participants at the auctions and open houses; and that both first-time buyers and investors are still relatively active in the market.
âAgain, much of the national growth has been driven by Auckland’s image, but the market hasn’t seen the full winter downturn that we normally expect.â
The institute expects sales volumes to remain at a solid level over the next two months unless there are significant changes in the underlying fundamentals, she said. declared.
The median number of days to sell a property nationwide fell by 15 days, from 46 to 31 compared to June 2020, which was the lowest for a June since 2016.
And more than a quarter of all properties were sold at auction (26.9%), up from 10.7% in June 2020.
But the total number of properties available for sale nationwide fell 33.3% in June to 13,861, from 20,772 in June 2020, down 6,911 properties from 12 months ago. .
This was the second lowest inventory level the Institute has seen in New Zealand. The lowest was in December 2020, when it was 12,932.
Kiwibank Senior Economist Jeremy Couchman said that “like a runaway freight train” the housing market seemed elusive, but it was slowly reacting to recent policy changes.
The limited supply was generating record growth in house prices even as selling activity declined, he said.
While seasonally adjusted sales rose 7 percent in June, the nearly 8,000 sales were still down from 10,000 views at the end of last year.
Couchman said recent policy changes are having a more moderate impact on the market than previously thought.
However, national house price growth appears to have peaked in the current cycle of around 30% and from there house price growth is expected to slow, he said.
âMortgage rate hikes seem to be on the agenda sooner than previously thought and the case for the Reserve Bank to start raising the official cash rate in 2021 is becoming evident.
âAnd a construction boom means that new housing offers are coming onto the market. However, builders are struggling to find manpower to keep the construction boom going. “
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