The Real Estate Institute of New Zealand (REINZ) has released its March house price results, which registered a significant bounce in values nationally, with prices also hitting a new record.
In the month of March, the national stratified median price rose by 3.4% to nearly $427,000. Prices rose by 0.4% in Auckland over the month, by 1.9% in Christchurch, but fell by 2.3% 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 rose to 9.2% nationally in the year to March 2014 to be 17.3% above their November 2007 peak. Prices in New Zealand’s largest city, Auckland, rose by 12.1% in the year to March to be 31.9% above their July 2007 peak. This was followed by New Zealand’s second biggest city, Christchurch, where prices rose by 10.9% over the year to be 19.9% above their 2007 peak. Finally, prices in the capital, Wellington, rose by only 1.6% in the year to March and were only 0.6% above the September 2007 peak.
The below chart shows the annual price growth in trend terms (3-month moving average) in order to smooth volatility, with the trend still appearing weak:
The strong price results have caused some confusion in the market over whether the RBNZ’s macro-prudential curbs on high risk mortgage lending are still working.
House prices have risen despite a sharp slowing of sales, with the REINZ reporting that sales volumes were 10% lower than March 2013. In a similar vein, New Zealand housing loan approvals remain weak, as shown below:
And to add further confusion, the REINZ’s price results contradict those produced earlier this week by government valuer Quotable Value, which reported a continued slowing of price growth across New Zealand.
According to Westpac chief economist Dominick Stephen, reported in Interest.co.nz:
…house sales remained low in the REINZ’s latest housing market figures, and the number of days required to sell a house rose slightly, “indicating that the housing market remains subdued”.
But he said the price data emerging from the housing market was “a bit more mysterious”. and was concerned that the REINZ’s house price index “may have been skewed by the RBNZ’s LVR restrictions”.
“In the present circumstances, we prefer the Quotable Value monthly house price index as a more accurate measure of house prices. This has registered a sharp slowdown in house price inflation since the start of the year. The difficulty is that Quotable Value only records sales upon settlement, meaning the data is effectively two months behind the REINZ series.
“So the jury remains out on the trend in house prices. All we know for sure is that house price inflation was very slow two months ago.”
