September data shows Auckland is still in zombie mode, although prices are firming, while the rest of NZ is down again on sales volume but strong on prices.
Auckland sales volumes
The number of Auckland properties sold in September is up 3.5% on August and 6.3% on September 2018.
Ironing out the month-by-month fluctuations, the 3-month moving average is down 0.9% but the 12-month moving average is up 0.5%.
In terms of sales volumes, Auckland is still sliding sideways. We’re still in walking dead zombie mode folks, as you can see in the chart below.
Perhaps Auckland is on the verge of gradually pulling itself up from the pit of despair? The next few months will be telling.
Around the districts, North Shore and Waitakere are particularly weak in terms of sales volumes, while Papakura and Franklin are particularly strong.
Auckland house prices
The REINZ House Price Index (HPI) measures the changing value of property in the market rather than the much coarser median selling price. As such it is not influenced by changes in the composition of sales.
For example, more apartment sales and fewer sales of higher priced standalone houses reduces the median sales price, even though actual values of individual properties have not decreased at all. This makes the HPI a more reliable indicator of price movements.
Case in point… Bindi Norwell says, “The importance of the HPI is well highlighted by the Otago Region this month. The median sale price increased 19.6% since last year, the third highest of all the regions. However, the same region had the fifth worst annual growth in HPI at 7.2%. Sample composition changes such as size of property or underlying value of properties sold can change statistics purely based on price, such as a median. However, because the underlying value of each property sold is taken into account by the HPI, such sample changes have little effect on HPI results. Clearly, the Otago region dwelling value growth has been moderate when compared to other regions.”
The Auckland HPI for September was down 0.8% on September 2018 but up 1.6% on August 2019. Auckland was the only region in New Zealand to experience a year-on-year decline in HPI.
However, the index has shown strong growth over the last two months, as seen in the chart below. We speculate that this is a simple matter of supply and demand – the reduced number of properties available for sale has boosted prices. New property listings in Auckland were down 22.5% annually, the largest decrease in new listings in the North Island.
So although sales volumes are in still zombie mode, prices are recovering on the back of low inventory. Spring typically sees a flood of properties coming to market, which may well subdue prices. The next few months will be telling.
New Zealand sales volumes
In terms of sales volumes, the residential property market failed to spring into Spring. Nationally, the number of house sales in September was down 1.1% on August 2019 but up 3.3% compared to September 2018.
Bindi Norwell, Chief Executive at REINZ, hyped September as having the highest number of residential properties sold for the month of September in 3 years. She went on to say, “This suggests that we’re starting to see the usual spring uplift and also that more confidence is starting to creep back into the market”.
LOL. How can you describe a month-on-month decline in sales as being a ‘spring uplift’? I admire REINZ’s ever-present optimism in always finding something worse to compare a poor result against to make said poor result look great!
We do things differently here. In an effort to present an objective view of the market, we iron out month-by-month fluctuations by looking at rolling 3-month and 12-month moving averages.
Nationally, the 3-month moving average is down 1.4% and the 12-month moving average is up a mere 0.2%, suggesting a sideways-sliding ‘zombie’ trend.
We’ve been predicting for a while that Auckland’s zombie market is a leading indicator for what will spread to the rest of New Zealand. Mark my word, the zombies are coming.
Maybe next month will deliver the trend-reversing result the REINZ are praying for. If not, I’m sure they’ll find a bad number somewhere to compare the poor result against to make it all look peachy!
Results around the country are quite varied depending on where you look.
Regions with the greatest drop in September sales volumes were…
- Marlborough: Down 14% (the lowest since September 2017)
- Gisborne: Down 20% (the lowest September in 7 years)
- Southland: Down 27% (the lowest non-January figure since December 2014)
It’s not all doom and gloom though, with some regions managing to record strong growth.
- West Coast: Up 11% (but very small base; only 4 more houses sold)
- Otago: Up 12%
- Tasman: Up 46%
New Zealand house prices
The house price index (HPI) measures the changing value of property in the market. Values for New Zealand excluding Auckland continue to climb strongly. September was up 1.3% on August and up 7.6% on September 2018.
Sales volumes may be flat but prices outside of Auckland are still growing strongly.
The same 3 regions as last month have shown the greatest increases…
- Gisborne/Hawke’s Bay: Up 13% on September 2018
- Manawatu/Wanganui: Up 16% on September 2018
- Southland: Up 18% on September 2018
In September, 9 out of 12 regions reached record high HPI levels. The exceptions were Auckland (down 1.5% from its peak), Northland (down 1.2% from its peak), and Canterbury (down 0.2% from its peak).