House price growth slowed in Auckland and Wellington in September but rose in Christchurch, according to the Real Estate Institute of NZ's House Price Index.
It shows that across the entire country, house prices increased by 2% in September, which was exactly the same rate of growth as August.
But there were some significant regional variations.
In Auckland monthly price growth dropped from 2.3% in August to 0.9% in September, with all Auckland districts reporting ongoing price growth apart from the central suburbs where the Index recorded a 1.9% decline for the month.
And price growth in the Wellington region dropped from 1.7% in August to 0.5% in September, with the Index recording price declines of -1.3% in Porirua and -1.0% in Upper Hutt, while Lower Hutt and Wellington City recorded monthly increases of 2.2% and 0.3% respectively.
In Christchurch monthly price growth rose from 2.6% in August to 4.9% in September.
And removing the Auckland figures from the picture shows that price growth in the rest of the country as a whole, increased from 1.7% in August to 2.9% in September.
The full regional figures for September are detailed in the table below.
However the monthly figures from the REINZ should be treated with a bit of caution.
That's because the figures it publishes on market activity each month are likely to be revised, either up or down, in the following months.
For example, when the REINZ published the HPI for August, it gave the Auckland region an index figure of 3985 and the September report shows that this has increased to 4009.
That should mean that the Index for Auckland increased by 0.6% for the month, but the September report lists the monthly increase as 0.9%.
Checking the REINZ's published HPI figures for August and September shows similar variations in most regions and some of the variations are significant.
For example, the REINZ's published figures show the HPI for Porirua declined from 4415 in August to 4284 in September, which suggests a change of -3.0%, but the REINZ's September report gives the change for the month as -1.3%.
So why is that?
It appears that the problem lies with some agents being a bit tardy in getting details of their sales to the REINZ each month.
According to the REINZ, its monthly statistics are based on unconditional sales reported by its members each month.
For reporting purposes, it has a cut off date for results each month, allowing it to make its calculations on market activity, which it then publishes in its various reports.
However some agents take longer than others to report their results, so the REINZ is still receiving results after the cut off date.
These late entries result in revisions being made to the figures for previous months, after the monthly reports have been published.
So the monthly figures REINZ publishes are accurate based on sales information received "as at" the cut off date and are likely to be subsequently revised.
Of course these late entries don't just affect the REINZ's House Price Index, they also affect the REINZ's reported monthly median selling price and sales volume reports.
The REINZ says it has been adjusting its monthly figures in this way since March 2017.
So does this mean the REINZ figures are inaccurate?
Inaccurate is too strong a word.
The revisions that REINZ has to make to its figures will diminish over time.
So the three month change figures will be significantly more accurate than the monthly change figures, and the annual figures will be even more accurate.
But the monthly figures should probably be best regarded as a general indicator of market movements which could be subject to change, rather than an exact figure.
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REINZ House Price Index - September 2021
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38 Comments
These late entries result in revisions being made to the figures for previous months, after the monthly reports have been published.
The skeptic in me wants to suggest that this incentivises agents to be late in reporting sales which didn't quite meet price expectations.
This would not only make the current month's figures look better, but by the time next month rolls around and they've been revised lower, it makes the new report's month-on-month figures look better by comparison too.
My prediction is we will see the opposite of this next year. That is, in Auckland the median will be consistently higher than the HPI.
My basis for this is composition of sales next year is likely to change significantly. In particular sales of new build townhouse will drop away relative to existing properties.
That Upper Hutt City and Porirua City prices have slipped back (albeit by a very small amount) doesn't surprise.
But, unsurprisingly, Wellington City continues its upward price momentum...... For at least 6-7 years now, it's been slim pickings for those wanting to buy a stand-alone family home in Wellington's inner-city suburbs. If you own such a house that has drive-on and gets good sun, then you are fortunate indeed. Never sell it!
TTP
It can only be overpaid civil servants who could tolerate living in Wellington.
I had my first job in Wellington and was gob-smacked to see old ladies having to hold on to ropes slung across the intersections on each pedestrian cross signal so the wind wouldn't blow them off their feet. I wouldn't have believed it if I hadn't seen it. I could only stand Wellingtons winds for three months and couldn't get back to Auckland fast enough.
And then there's the earthquake fault line right beneath it.....
I lived there for 14 years after moving down from Auckland, I loved it. Sure there were a fair few windy days, but I got used to it, even enjoyed it.
Once I had children, however, it was much less fun.
(Note: Not a public servant.)
Hi streetwise,
I've lived in NZ for a very long time - and I've spent a number of winters in the capital.
I've never seen or heard of "old ladies having to hold on to ropes slung across the intersections on each pedestrian cross signal so the wind wouldn't blow them off their feet.". (In any case, ropes won't prevent people from losing their footing - because they are not rigid structures like stair handrails.)
I've just checked with two friends who have resided in Wellington for a combined total of 130 years. Neither of them has seen or heard of such a bizarre thing happening in Wellington. Both laughed at the "Monty Python" image.
Does anyone seriously believe that "old ladies" would risk putting themselves in such a predicament - just to cross a traffic intersection?
TTP
Level 2 is nice..
Provincial cities still ticking along.
Christchurch finally catching up at an amazing pace!
"Finally catching up"? To what? The current madness? Sarcasm much Yvil?
Prices in CHCH have previously been pushed down by memory of the EQ, and also lots of new build activity/oversupply.
The effect of the EQ was to destroy a bunch of older (lower spec) homes, and replace them with modern builds (brick and tile, steel frame, solid concrete slab, well insulated). Much better than half the older weather board/plaster rubbish that people in Auck pay billions of dollars for. The new areas that have been built just out of the city represent great value and quality of life. Big movements in CHCH prices where just a matter of time.
I think prices in CHCH will move until yeilds match what you get in Wtgn or Auck.
Not of course to say that the whole country is not ridiculously over priced (which it is), but CHCH parity with other big centers based on yield was always going to happen.
Hi Fluffy,
Give me a character, weatherboard home in a central location any day.
I couldn't stomach living in an ugly, synthetic material, new-build - way out in the whop-whops.
TTP
You'll be stuck renting forever if you're not prepared to compromise, TTP. You have to be prepared to start at the bottom.
Catching up to the price rises that have already occurred in Akl & Welly ozzzy2, I thought this was obvious
Yes, but you make it sound like a good thing..
Thank you Greg for a very good, informative and detailed article
In the clearest sign yet that global investors’ worries are growing, the risk premium on investment grade Chinese property sector firms...jumped to its widest in more than two months...The $5 trillion property sector accounts for around a quarter of the Chinese economy...
~25% of the economy? They aren't really trying like the rest of us, are they! They aren't a proper economy until the property sector is at least 95% of it - like ours is. (NB: What would happen if the price of dairy, wood and meat halved versus what would happen if the resale price of property halved?)
We are all living in interesting times.
what will happen is - it will create quite a bit of unemployment in those sectors.
Hard to pay a mortgage or the rent if you dont have a job.
Hard to keep that regional cafe running - if there are no forestry or farmers coming in for coffee and lunch.
Hard to keep the city restaurant running if the "regional investors" cant get rent for their properties and cant spend up big on dining out.
Hard to sell clothes and furniture if the farmers and forestry workers and cafe/ restaurant owners have no income or jobs.
....and thats called the recession spiral effect.
Although imagine if you have a house and you paid 30% more for it in the last 12 months - and any of the above criteria applies.
It won't happen here and it'll be wrong to compare what's in China with good ol'NZ.
You can't trade on moral hazard in China.
"It won't happen here". Of course, it could never happen in NZ. We are totally immune to global macro events...
Do not bet on unemployment as NZ often has low unemployment rate due to labour shortage, but watch interest rate, the inflation pressure is building up everywhere around the world. What if rate increases back to around 5% or over, it will be a nightmare to the property market!
One-fifth of the homes in China – at least 65 million units – are empty.
https://www.businessinsider.com.au/china-empty-homes-real-estate-evergr…
Your number is wrong and hence the assertion.
The property sector represents 30% of China's GDP, whereas New Zealand is merely 13%- which is less than half of what China has and far from it.
For a comparison, the US of May is 6%.
Nothing scary over here, we're pretty average between CCP and uncle Sam.
but house price to income in NZ is too high, Simply bonkers: House prices now 10.5 times median disposable income, ANZ economists say - NZ Herald
NZ is still the best country to live in the world post-COVID and real estate prices will continue to go up with many existing equity holders knowing this and will buy more property on the dip. When you combine that with the only real investment sector that kiwis are willing and able to invest in, property will win because there's heaps of cash up people on the sidelines who have not bought in the past decade and have just been gradually building up their deposits and waiting for the opportune time.
Also, wealthy cashed up Chinese investors will need to get out of China and will park their cash into real estate into Australia and NZ to protect themselves and their families to avoid the social unrest from an impending economic collapse triggered from the Evergrande-like firms and businesses. They're just rich economic refugees getting out of debt fuelled Chinese economy that now is running on nothing more than just fumes. Time is ticking.
Based on the 3 monthly changes, it's seems pretty obvious that the market is trending upward strongly- and that's accurate.
I really hope Tim from Palmy got on the ladder when he had the chance!
Good stuff Greg. It'll be interesting to see what happens in Auckland and Welly in the coming months.
Btw, while I don't doubt that argent tardiness is the main source of inaccuracy it should be noted that occasionally an unconditional sale will actually fall through and thus would have to be reversed out of the sales figures in a later month.
5 years ago we paid 650k for our house in Christchurch , now 1.6. million we had offers door knockers but our house is not for sale
The pool of buyers who would pay 1.6 mil for something in CHC is tiny.
Give it 6 months then...
I think he is pulling your leg, personally I wouldn't pay $1.6 for anything in Christchurch.
A couple viewed a house with an agent - asked if they could look at something a bit more expensive - the agent said “sure, I can bring you back to look at this property again tomorrow”.
Classic. Also what someone says they will pay and what they are actually prepared to put on paper are two different things. I think its called "Fishing". Talk is cheap and this country is full of tire kickers.
On the flipside, what the agent says a house might sell for, and what the vendor's reserve price at auction is, are two entirely different things. I think it's called "bait and switch".
so do you see the housing market softening in 2022
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