REINZ reports volumes up in Feb from Jan, but down from Feb 2010; median price up, but days to sell up too. What are you seeing?

By Bernard Hickey

The Real Estate Institute of New Zealand (REINZ) has reported there were 4,502 properties sold in February, which was up 38% from January but down 10% from February a year earlier.

The median sale price in February was NZ$350,000, which was up from NZ$340,000 in January, but flat from a year ago.

The median number of days to sell rose to 58 days in February from 51 days in January and was up from 46 days in February a year ago. During the boom from 2002 to 2007 the median days to sell in February were around 32 days. The record high days to sell was 64 in January 2001 and the previous high was 62 in February 2009. The median days to sell in Northland was a record 111 days.

The REINZ described the sales figures in February as showing a modest recovery in housing prices and volumes. It said volumes were up 45% in February from January once sales in Canterbury/Westland are excluded.

“Overall, the data is a bit of a mixed bag,” said REINZ CEO Helen O’Sullivan.

“February’s transaction volumes were always going to be an improvement on January, but the improvement in the raw medians in most districts as well as in the stratified median prices is a positive sign," O'Sullivan said.

REINZ's stratified median index is compiled using methodology specified by the Reserve Bank to remove the skew from more sales in one price band than another. See our interactive chart here and below.

It shows the index up 2.3% over the last month, but down 0.9% over the last 3 months and down 0.7% over the last year. It remains 5.6% below its peak and compound annual growth rate over the last five years was 2.3%.

“The recovery in transaction volumes in Auckland and Manawatu/Wanganui is encouraging, with both areas recording higher numbers of transactions in February 2011 than in the same month of 2010.  In fact, Auckland’s transaction volumes were marginally higher – by just one transaction – than in February 2009.  On the less positive side, the overall transaction numbers are still 4.3% below the February 2010 level, and median days to sell increased nationally and in most areas," O'Sullivan said.

REINZ said reports from its members indicated that although rents are rising in key urban areas and there was a continuing shortage of housing stock, particularly in Auckland, buyers were still being cautious. 

"This is evident in the increased days to sell, which measures the time between the property being listed and an unconditional sale being completed.  Equally, vendors are not under pressure to sell and landlords are successfully increasing rents, albeit by small increments," REINZ said.

O’Sullivan said the Reserve Bank's cut in the Official Cash Rate last Thursday may provide some encouragement to buyers.

"Equally however it makes it easier for current owners to hold if they don’t see the pricing they expect.  We would be really pleased if the rate decrease had a positive impact on the construction of new housing stock, especially in the Auckland market.”

Canterbury earthquake

REINZ said the Christchurch earthquake on February 22 had hit sales volumes in the area.

"A small percentage of Christchurch offices were unable to file returns for February and some sales reported as going unconditional in February may not complete if there has been substantial property damage," it said.

"Future sales are likely to be conditional on structural and geotechnical assessments, which will take time to complete. However, inability to procure insurance cover is currently the single biggest impediment to transactions in Canterbury."

ASB economist Chris Tennent Brown comments:  

The housing market had a small recovery in turnover, and prices are holding up reasonably well according to the REINZ nationwide housing report. However, average days to sell have extended to 48 days, which is the longest time to sell recorded since March 2009.  A separate report from realestate.co.nz shows the amount of inventory on the market remains reasonably contained, which is supportive of prices.  Based on the two reports for February, the ratio of inventory to current turnover suggests there is currently 11.2 months of inventory on the market, which is the lowest level in 9 months.

Prices have been going sideways for most of 2010, and are currently down 4.9% from the 2007 peak according to the stratified median house price index.  We expect this to continue over the coming months at a nationwide level. However, there are a number of regional influences in effect.  

Auckland agents noted signs of investors returning to the market because of increasing rental returns.  This is consistent with other anecdotes and reports of a relatively tight rental market in Auckland at present.  However, this investor interest does not seem to be spurring an overall pick-up in activity. Auckland’s days to sell lengthened significantly over the month, but nonetheless remain below the nationwide median.By removing Canterbury from the data, the pick-up in turnover from January improves from +2% to +6%.  

The property market continues to remain subdued.  Buyers will feel in no rush, given the lack of price appreciation in the market over the past year. The market remains tipped in the buyer’s favour, evidenced by the long number of days to sell a property at present.  We expect prices to remain down around 5-6% from the 2007 peak over the coming months. We also expect prices to hold up better in the regions with stronger population and wage growth over the year ahead.

The RBNZ has cut the OCR to 2.5% following the Canterbury earthquake. The RBNZ has recognised the economy was already tracking considerably weaker than expected prior to the quake.  In particular, the RBNZ noted the continued caution in the household sector and weak residential investment.  We expect household caution will continue over the coming months, and expect the OCR will remain on hold until March 2012.  

Here is the REINZ's regional commentaries.

Northland

The median price for Northland rose modestly between January 2011 and February 2011, but the results within Northland were mixed.  Whangarei City recorded solid gains in prices, however, these were offset by falls in Whangarei Country.  Volumes improved significantly compared to January 2011, but were down by a quarter compared to February 2010.

Northland’s days to sell reached 111 days, up 15 days compared to January 2011 and up more than 60% compared to February 2010.  Northland’s days to sell have set a new record, beating the old record of 96 days set in October 2000 and again in January 2011.

Auckland

Strong growth in prices in the North Shore in February 2011 compared with January 2011 were offset by falls in the outer parts of the region and Rodney District.  There was modest price growth in Manukau City, but Waitakere and Auckland City did not register any significant price movements between February 2011 and February 2010.  Across the Auckland region, price movements were modest.  There is some indication of investors returning to the market to acquire well priced rental properties as a result of increasing rental returns.

Volumes were up strongly in February 2011 compared to January 2011, however, Waitakere City recorded a comparatively modest rise.  Compared to February 2010, North Shore recorded strong volume growth, but Rodney and Outer Auckland both recorded significant falls.  The number of homes sold in February 2011 is also very similar to the volumes in February 2009.

Auckland’s days to sell increased from 41 days in January 2011 to 50 days in February 2011.  Days to sell were also 41 days in February 2010.  Auckland’s days to sell at 50 days is at the upper end of February results for the past 10 years.

Waikato/Bay of Plenty

Prices generally fell modestly across the Waikato/Bay Of Plenty region during February compared to both January 2011 and February 2010, although there was some positive price movement in Taupo.  Compared to February 2010 medians dropped noticeably in Waikato Country and Mt Maunganui/Papamoa; however, given the relatively small data set medians need to be treated with some caution.

Volumes were up strongly compared to January 2011, but compared to February 2010 the picture was more mixed.  Taupo’s volumes were markedly stronger as a result of vendors being more willing to accept the current market pricing.  Waikato Country and Rotorua recorded noticeable falls in the number of sales, while Mt Maunganui/Papamoa recorded a noticeable increase.

The median days to sell jumped to 79 days across the region, compared to 66 days in January 2011 and 62 days in February 2010.  This is the longest median days to sell for the Waikato/Bay of Plenty region since January 1992 and exceeds by 1 day the previous record set in February 2009.

Hawkes Bay

The median house price rose noticeably in Napier between January 2011 and February 2011, but recorded a 5% fall compared to February 2010.  Hastings recorded no change between January 2011 and February 2011, but a slight modest increase compared to February 2010.  Across the region the median price only moved modestly between January 2011 and February 2011, and no change was recorded compared to February 2010.

Volumes were stronger in Hastings, but weaker in Napier compared to both January 2011 and February 2010.

The median days to sell was 60 days for February 2011 compared to 55 days in January 2011 and 45 days in February 2010.  60 days to sell is at the upper end of the medians reported over the past ten years.

Manawatu/Wanganui

The Manawatu/Wanganui region recorded a very mixed result for both median prices and volumes for February 2011.  Changes to the median price were modest for Palmerston North compared to January 2011 and February 2010, but volumes were very strong across the same time periods.  In comparison, Wanganui recorded an increase in medians, but weak volumes.  Overall, the regional volume growth was largely driven by Palmerston North, with Wanganui providing the median price growth.

Indications are that well presented properties in the $200 - $300,000 range are attracting both first home buyers and investors, however, buyers are undertaking plenty of research and are not being rushed.  The median days to sell increase to 65 days in February 2011 compared to 52 days in January 2011 and 53 days in February 2010.

Taranaki

The median house price dropped noticeably in Taranaki Country between January 2011 and February 2011 and fell by more than 11% compared to February 2010 – however, the data set is small and medians need to be treated with some caution.  Volumes for Taranaki Country also fell markedly compared to February 2011.  New Plymouth City recorded a recovery in volumes during February 2011 compared to January 2011 and the volumes are in line with February 2010.

Across the region prices rose modestly between January 2011 and February 2011, but were flat compared with February 2010.  Across the region the lift in volumes in February 2011 compared to January 2011 was significantly weaker than the lift in volumes across the rest of the country (excepting Canterbury/Westland). 

The median days to sell in Taranaki reached 64 days in February 2011, compared to 54 days in January 2011 and 49 days in February 2010.  The median days to sell is back at the same level recorded in December 2010.

Wellington

The median house price for the Wellington region increase 10.4% between January 2011 and February 2011 with strong growth reported in Hutt Valley and Central Wellington.  Compared to February 2010 the median price rose strongly in Hutt Valley and to a less extent in Central Wellington.  Across the rest of the region results were mixed. 

Volumes were up strongly in February 2011 compared to January 2011 except in Western Wellington.  This part of the city also recorded the weakest volumes compared to February 2010.  Volumes compared to February 2010 were also weak in Eastern Wellington, although there was very strong growth recorded in Upper Hutt.

The Wellington region’s median days to sell fell from 60 days in January 2011 to 49 days in February 2011, but this was up markedly on the 32 days recorded in February 2010.

Nelson/Marlborough

Median price movements across the Nelson/Marlborough were modest in February 2011 compared to both January 2011 and February 2010.  The volume lift in February 2011 compared to January 2011 was less than half that recorded nationally (excepting Canterbury/Westland), while the drop of almost 21% compared with February 2010 was the weakest of all regions (excepting Canterbury/Westland).

Somewhat unexpectedly Nelson/Marlborough was the only region to record a drop in median days to sell, with February 2011 recording 48 days compared to 57 days in January 2011 and 55 days in February 2010.

Canterbury/Westland

The Canterbury/Westland results have been impacted by the February 22 earthquake, which means that the results should be treated with caution and cannot be relied on as an indicator of trends.  A small percentage of Christchurch offices were unable to file returns for February, and some sales reported as going unconditional in February may not complete if there has been substantial property damage.  Normal confirmations of sale were interrupted following 22 February for obvious reasons, but also because a large proportion of legal firms were unable to access their premises.  Some of these transactions may be reflected in March figures instead. 

Future sales are likely to be conditional on structural and geotechnical assessments, which will take time to complete; however inability to procure insurance cover is currently the single biggest impediment to transactions in Canterbury.   All insurance companies are imposing stand down periods, with the minimum reported period being 21 days. 

March will also be impacted by the lack of availability of media advertising anywhere in the city until around  9th/10th March, nearly three weeks after the quake.  Transactions, which are conditionally concluded in March, are unlikely to complete in that month due to these limitations.

Central Otago Lakes

The median house price rose noticeably between January 2011 and February 2011 in Queenstown, although the median price in Central only increased modestly.  Volumes in February 2011 were also up significantly compared to January 2011, but were down markedly compared to February 2010.

The median days to sell for the Central Otago Lakes region increase from 52 in January 2011 to 67 in February 2011, similar to the 66 days recorded for February 2010.

Otago

The median house price for Dunedin and the Otago region rose noticeably in February 2011 compared to January 2011 and modestly compared to February 2010.  Volumes were up strongly across the region between January 2011 and February 2011, and Otago recorded the 3rdstrongest movement in volumes compared to February 2010 of all the regions.

The median days to sell only increased modestly compared to most other regions, with the median days to sell rising only 2 days between Januarys 2011 and February 2011 to 57 days.  The annual change in median days to sell between February 2010 and February 2011 was only 6 days; from 51 days to 57 days.

Southland

Median house prices rose noticeably in Invercargill and across the region generally, but there was a significant fall in the median price in Gore.  Volumes were up, in line with the national movement in both Invercargill and Gore in February 2011 compared to January 2011, but elsewhere in the region volumes were noticeably weaker. 

The median days to sell for February 2011 was 52 days, an improvement on the 57 days recorded for January 2011, but significantly weaker than the 32 days recorded for February 2010.

(Updated with interactive chart, regular chart, detail on Christchurch sales, ASB economist's comment, REINZ Regional details)