House prices in New Zealand continued to rise in July. However, national sales volumes dropped sharply in the month. The national sales volumes, on seasonally adjusted terms, fell 11 percent month-on-month to its lowest since January. This is the third straight monthly decline. According to REINZ, the decline in sales volumes is because of subdued activity on lack of properties available for sale rather than scarcity of demand.
Throughout the regions, subdued seasonally adjusted sales volumes were widespread in July. Out of 12 regions, sales volumes were lower in 10 of the regions, with particularly sharp falls in the Hawke’s Bay, Northland and Auckland. On a year-on-year basis, sales volumes fell 21 percent in Auckland, while non-Auckland regions sales dropped 4.5 percent.
However, it is evident that there are still solid demand pressures. The median number of days to sell remained the same. Throughout the country, the measure was at 30.2 days in July that is quite lower than its historical average. A more rapid turnover was witnessed in seven of the 12 regions. Southland and Wellington lead the way, with both registering median days to sell of just 23 days.
The REINZ Stratified House Price Index rose further by 2.4 percent month-on-month on a seasonally adjusted basis. This is the fifth straight month of around 2 percent monthly price growth. Nationwide price growth on three-month annualized terms is currently at a 26 percent pace.
The growth of price was also widespread. All the major regions registered a rise in stratified prices last month. Wellington and Auckland both witnessed rises of 2.5 percent on sequential basis. Christchurch was the weakest of the main regions that recorded a price growth of just 1.4 percent. Meanwhile, South Island prices, excluding Christchurch, rose 3.1 percent month-on-month and 13 percent year-on-year.
A fall in volumes of sales throughout New Zealand is notable, however it does not seem to be because of subdued demand, noted ANZ in a research report. Actually, demand pressures continue to be solid. The main focus now is on how the LVR restrictions’ latest round might impact. Earlier rounds of prudential tightening had an initial effect on the activity of the market.
“For the RBNZ to truly be able to respond to currency strength through OCR cuts, it will need to see the market cool meaningfully,” added ANZ.
