The Real Estate Institute of New Zealand (REINZ) has released its December house price results, which registered a significant fall in quality-adjusted values nationally, with prices also down across two of the three biggest markets.
In the month of December, the national stratified median price fell by 1.0% to just over $433,000. Prices fell by 3.4% in Auckland over the month and by 5.3% in Wellington, whereas prices in Christchurch increased by 0.5% (see next chart).
The price changes are shown more clearly in the below chart, which shows the values in index form since 2005:
On an annual basis, house prices rose by 9.2% nationally in the year to December 2013 to be 13.8% above their November 2007 peak. Prices in New Zealand’s largest city, Auckland, rose by 14.4% in the year to December 2013 to be 25.7% above their July 2007 peak. This was followed by New Zealand’s second biggest city, Christchurch, where prices rose by 7.2% over the year to be 18.5% above their 2007 peak. Finally, prices in the capital, Wellington, rose by only 2.0% in the year to December, but were 0.3% below the September 2007 peak.
The new speed limits on high loan-to-value ratio (LVR) mortgage lending, implemented by the Reserve Bank of New Zealand (RBNZ) on 1 October 2013, clearly appear to be biting. In addition to the price falls recorded in January, the latest home loan approvals data from the RBNZ, released on Thursday, revealed an ongoing weakening of mortgage demand, with year-on-year growth in the number of approvals falling by 10.6%: the lowest rate of growth since February 2011 (see next chart). This also suggests that price growth should slow in the months ahead.
Further, according to the REINZ, “the softer trend in sales” has continued, with sales falling by 1.1% compared with December 2012, with the seasonal drop-off in sales from November (18.3%) also well above the decade average fall of 13.6% recorded between the months of November and December.
The moderation of sales activity suggests that the RBNZ’s new lending limits are having a material impact, since any slowdown in the housing market arising from the RBNZ high LVR lending speed limits could be expected to hit sales volumes first before prices.
