New Zealand property bubbles

The Real Estate Institute of New Zealand (REINZ) has released its house price data for September, which has reported booming sales and record high prices:

As shown above, the seasonally adjusted median house price soared 14.1% year-on-year in September, with Auckland rising 11.8% year-on-year and regions outside of Auckland rising 16.3%.

Sales volumes have also soared, rising 30.9% year-on-year, with Auckland sales surging by 47.2% year-on-year and regions outside of Auckland rising 24.1%:

Commenting on the results, Bindi Norwell from REINZ noted:

The number of residential properties sold in September across New Zealand increased by 37.1% from the same time last year (from 6,112 to 8,377) – the highest number of properties sold in a month in New Zealand for 42 months (March 2017) and the highest number of properties sold in a September month for 14 years…

For New Zealand excluding Auckland, the number of properties sold increased by 29.9% when compared to the same time last year (from 4,245 to 5,516) – also the highest for the month of September in 14 years.

In Auckland, the number of properties sold in September increased by 53.2% year-on-year (from 1,867 to 2,861) – the highest in 52 months and the highest annual increase in sales volumes in 11 years…

Bindi Norwell, Chief Executive at REINZ says: “Normally one month out from an election, people start to take a wait and see approach, and sales volumes begin easing off. However, 2020 appears to continue in its trend of being an anomaly, with the number of properties sold the highest in 42 months, since March 2017, when the country was last experiencing such growth…

“Much of this activity is being driven by the extremely low rates at which people can borrow money, which is at its lowest levels since records began, consumers having additional ‘cash’ available due to a lack of international travel and some uplift from returning ex-pats. When you then add in high levels of confidence in the housing market, the removal of the LVRs back in March and people’s fear that prices are just going to keep increasing in the future, then this explains why people are going to such lengths to secure a property now,” points out Norwell…

Median house prices across New Zealand increased by 14.7% from $596,956 in September 2019 to a new record high of $685,000 in September 2020, and up from $675,000 in August this year (a 1.5% lift).

Median house prices for New Zealand excluding Auckland increased by 17.0% from $500,000 in September last year to a new record median price of $585,000, and up from $570,000 in August this year (a 0.7% increase).

Additionally, Auckland’s median house price increased by 12.6% from $848,000 at the same time last year to $955,000 a new record high, and up from $949,500 in August this year (a 0.6% increase).

The next chart tells the tale:

Boom!

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