The Real Estate Institute of New Zealand (REINZ) has released its January house price results, which registered another significant fall in values nationally, with prices also down across all of the major markets.
In the month of January, the national stratified median price fell by 2.3% to just over $423,000. Prices fell by 2.4% in Auckland over the month, by 1.9% in Christchurch, and by 2.0% in Wellington (see next chart).
The price changes are shown more clearly in the below chart, which shows the values in index form since 2005:
Annual house price growth slowed to 7.7% nationally in the year to January 2014 to be 11.1% above their November 2007 peak. Prices in New Zealand’s largest city, Auckland, rose by 14.0% in the year to January to be 22.6% above their July 2007 peak. This was followed by New Zealand’s second biggest city, Christchurch, where prices rose by 10% over the year to be 16.3% above their 2007 peak. Finally, prices in the capital, Wellington, fell by 1.1% in the year to January and were 2.3% 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, are clearly biting. In addition to the price falls recorded in both December and 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 2.2% – the slowest rate of growth since October 2011 (see next chart).
Further, according to the REINZ, “ there were 4,719 unconditional residential sales in January, a 4.3% fall on January 2013… On a seasonally adjusted basis the number of sales was 1.1% lower compared to December, indicating that the number of sales in January was lower than would normally be expected for this time of the year”.
Overall, the moderation of sales activity, falling prices and declining finance approvals is evidence that the RBNZ’s new lending limits are having a material impact.
The RBA should take note.
