CoreLogic Head of Research Nick Goodall today comments on the latest REINZ results:

Today’s release from REINZ reported that property values in NZ tracked sideways in the month of April. This is according to the REINZ House Price Index (HPI), which is a better measure for evaluating property market performance than median selling prices. This is because it measures the value movement of all properties in an area, not only those that happen to have sold in the month being reported on.

The annual rate of change dropped further from the month before, to +1.3% p.a., and as reported following the CoreLogic QV HPI earlier in the month, the NZ index is weighed down by the weakness of the Auckland market. It has diminished in value by 4.4% over the last 12 months according to the REINZ HPI.

When evaluating the Auckland index, REINZ CEO Bindi Norwell concluded “This (decrease) may be due to the fact that we’ve seen some cooling in the past few months across some areas of Auckland”. CoreLogic suburb value data recently released revealed the detail of this weakness with 7 suburbs in the North Shore dominating the top 10 list of suburbs with declining values.

Of real interest was the continued drop in property values in the Queenstown-Lakes District. Values here have dropped 6.3% in the past three months. This is almost certainly influenced by the Government’s ban on Foreign Buyers, introduced on 22 October 2018. Two weeks ago Statistics NZ reported that sales to non-residents/non-citizens in Queenstown had dropped from 9.7% of the total a year ago to 2.7% in the first quarter of this year. The figure did not drop to 0% as Australians and Singaporeans are excluded from the ban, while anyone investing in an apartment development with at least 20 units can also continue to buy.

Days to sell is also a key measure and as the results from REINZ were seasonally typical for this time of the year. The figure flattened in Auckland (41 days) and drifted out across the rest of NZ (36 days). We expect days to sell to hover around these numbers throughout winter with a likely shortening in spring.

Winter will also bring a further reduction in sales volumes – REINZ reported a 11.5% drop in the number of sales compared to April 2018, but longer term we’re projecting volumes to improve gradually later in the year and through into 2020. This is due to the influence of the recent drop in the official cash rate, stronger-than-expected migration and the ruling out of a more comprehensive capital gains tax in sustaining demand for residential property.

While REINZ reported 5,800 sales for the month it must also be remembered those are sales involving an agent. We forecast there will be roughly 6,600 sales once all are processed by the councils. Month-to-month up to 20% of all residential sales are completed without an agent involved – at the moment however, it’s only about 12% - indicating the desire to have a professional involved in a sluggish market with reduced buyer numbers.