Residential real estate prices and sales in New Zealand fell in April but experts believe the market is steady and not subject to speculation over measures to be announced in the forthcoming Budget.
Overall prices fell by 0.4% in April but they are up 6.2% compared with a year ago and just 3.7% below their peak in November 2007, the figures from the Real Estate Institute of New Zealand show.
In Auckland property prices in April were 6.8% above the same month in 2009 while prices in Christchurch were up 5.6% and up 5.1% in Wellington. Other south island suburbs saw a year on year rise of 5.6% and prices on other north island suburbs were up 3.4%, the figures also show.
The annual price index though indicates stability in the market, said REINZ president Peter McDonald. Year on year real estate prices in Auckland were up 8% and up 8.8% in Nelson/Marlborough. The biggest annual rise was in Northland where prices rose 10.4%. However, Southland experienced an annual price fall of 2.63%.
Median house values fell $4,500 to $356,000 in the month to April, while the median number of days to sell increased from 35 to 40. The fastest sales were in Auckland where it took 35 days to sell followed by Canterbury at 36 days.
Property sales are also falling. The total value of residential sales, including sections, during April was $2.24 billion, a decrease on the March total of $2.73 billion. In April 5,007 properties were sold, down on the 6161 sold in March and 6,210 sold in the same month last year.
McDonald had said house values are firming rather than appreciating and he has welcomed the lessening of volatility in the market. ‘The peaks and troughs of the past 18 months have settled and it’s pleasing to see the market retaining its strength. The number of median days to sell has increased from 35 to 40 but that could be because greater use is being made of fixed period marketing such as auctions which appear to be getting very good results, especially in Auckland,’he explained.
First NZ Capital economist Chris Green said the market is clearly softening and that is likely to continue. ‘Put against a backdrop of softness in mortgage approvals data, it suggests you are likely to see a further softening in house prices,’ he added.
Some experts believe the market is in a state of flux ahead of next Thursday’s Budget, which is forecast to remove tax breaks on investment properties ahead of the start of a tightening cycle by the Reserve Bank of New Zealand. The RBNZ said last month it would begin lifting the official cash rate from its historic low of 2.5% in the coming months.
ASB economist Chris Tennent-Brown said the market is cautious on uncertainty about what the government might introduce in the way of changes to property tax. Also, the expectation of interest rate increases in coming months may be weighing on potential home buyers, he said.
‘The Budget 2010 will be keenly watched and will be a key influence on the direction for the property market over the coming months,’ Tennent-Brown said.