REINZ says national median house price up 1.1% month-on-month in May, Auckland up 4%

Auckland recorded the biggest annual and monthly increases in median house prices of any New Zealand region during May, but recent Reserve Bank moves are sparking interest from Auckland investors in other parts of the country, the Real Estate Institute of New Zealand (REINZ) says.

REINZ's May figures show national house sales volumes rose 21.6% in May year-on-year, with 7,989 sales, and were up 10.4% from April. The national median price was up $30,000, or 7%, to $460,000 year-on-year, and up $5,000, or 1.1%, from April.

Auckland sales volumes rose 14% in May from April, and 23% year-on-year. Auckland's median price rose $124,000, or a touch under 20%, year -on-year to $749,000. It was up $29,000, or 4%, from April.

RBNZ move 'may have some slowing impact'

REINZ CEO Colleen Milne suggested the Reserve Bank’s recently announced loan-to-value ratio (LVRs) restrictions for residential property investors who use bank loans in Auckland planned to take effect from October 1, may have some slowing impact on the rate of Auckland price increases. However, Milne said this would take some months to take effect.

"The inventory situation in Auckland remains very tight and the number of sales by auction continues at near record levels," said Milne

“Agencies across the upper North Island, which includes Whangarei through to Bay of Plenty, are reporting increased interest in residential properties from Auckland investors. There are also reports from leading agencies that some Auckland retirees are relocating to areas such as Taupo and Keirkeri where they can get better value for their money and funds for retirement. The Reserve Bank’s introduction of the 30% LVR for Auckland may have the effect of moving investors’ attention from Auckland to the regions."

Milne said sales volume across Auckland were expected to continue to increase if supply allows, with some buyers seeking to complete their purchases and obtain loans before October.

“Across the rest of New Zealand the major theme is strong sales volume growth, with six regions showing more than 20% increases in sales in May this year compared to May last year, and a few showing strengthening prices. Regions such as Otago, Northland and Central Otago are all showing firm upward price trends, while Waikato/Bay of Plenty, Taranaki, Wellington and Hawkes Bay are showing some signs of firming prices. The prospect of more relaxed lending policies (for everywhere except Auckland) from the Reserve Bank will be heartening for first home buyers in these regions," Milne added.

Excluding Auckland, the national median price was up $9,000, or 2.6%, in May year-on-year, but down $4,000, or 1.1%, from April to $349,000.

Auckland stratified index rises at fastest rate since 1994

Westpac chief economist Dominick Stephens described the rate of Auckland house price increase in May as "frenetic," noting the stratified index is up 25.6% year-on-year, which is the fastest increase since 1994.

"While these data were stunningly strong, it's worth keeping in mind that they give no insights into the likely impact of the impending policy changes around lending restrictions to Auckland property investors and the tax treatment of investor properties, both of which were only announced in mid-to-late May," said Stephens.

REINZ said nine regions recorded increased sales volumes in May compared to April, with Hawkes Bay recording the largest of 20.4%, followed by Taranaki with 16.7% and Canterbury/Westland with 13.2%. Compared to May 2014, all regions bar one recorded increases in sales volumes, with Taranaki recording the largest of 48.2%, followed by Waikato/Bay of Plenty with 35.3% and Northland with 28.3%. 

The total national value of residential sales was $4.845 billion in May, up $607 million, or 14%, from April.

Here's REINZ's full announcement and here's its regional commentary