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Market uncertainty could dog housing market for months

Weakly positive house prices in October are being put down to uncertainty over the forming of the new Government.

Median house prices in October only nudged up a seasonally adjusted 1.2 per cent compared to the previous month, according to new figures from the Real Estate Institute of New Zealand.

However, on an annual basis the figures were stronger, with only Auckland and Nelson on the decline. The national median was now $530,000, up 3.9 per cent.

ASB economist Kim Mundy said the weaker results were not surprising, given the election uncertainty last month.

READ MORE: Surging Wellington house prices hit record $480,000 median high amid sales shortage

"Ongoing soft sales activity is taking some of the heat out of the market and weighing on price growth," she said.

"We expect sales activity and price growth to remain subdued into 2018, given uncertainty around the impact of the new housing policies."

REINZ said that excluding Auckland, the country was doing well, hitting a record price of $440,000. In real terms, prices were up 8.5 per cent on the same time last year.

In Auckland, however, prices were clearly off last year's heady heights, down 3.2 per cent to $850,000 in the year to October – although they perked up a little on September.

REINZ's chief executive Bindi Norwell said Auckland's decrease was "predominantly the result of a large number of apartments being sold in the old Auckland city area which had brought down the price of the entire region".

The bigger picture was that house prices were still increasing, albeit at a slower rate in some regions than the last couple of years.

"Waikato is now the sixth region in the country to have exceeded the half a million dollar mark at least once – something, that a few months ago, we predicted would happen shortly."

Record prices were recorded in the Waikato (up 9.9 per cent to $500,000), Manawatu/Wanganui (up 11.5 per cent to $290,000), Canterbury (4.7 per cent to $450,000), and Otago (14.4 per cent to $412,000).

Nelson was the only region other than Auckland to experience a fall in the annual price, down 6.8 per cent to $447,500 – the biggest drop since April 2012.

Nationally, spring came late to the market, evidenced by the number of sales which continued to fall. Sales were down 16 per cent year-on-year to 5,689, and volumes excluding Auckland fell 14 per cent, while sales in Auckland dropped 21 per cent.

Norwell said October had seen some improvement, with half the regions across the country enjoying a pick-up in activity.

She welcomed the Reserve Bank's comments last week that it would make a decision later this month around reviewing the removal of LVRs (loan to value ratios), which have made mortgages more difficult to get.

"This data is evidence that the LVR restrictions have done their job of slowing the market, which is why REINZ has repeatedly called for LVRs to be reviewed for first time buyers," she said.

There were big falls in sales in Manawatu/Wanganui, down 24 per cent on last October, while in Northland and Bay of Plenty volumes were down by 21 per cent.

Sales were also markedly down on the West Coast, where they fell by almost a third, although prices in the region have jumped almost 24 per cent in the last year.

Real Estate Investar Editor
Real Estate Investar Editor
Real Estate Investar provides intelligent software, tools and data to help you save time and make money in the residential property investment market.

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