Fourth month in a row NZ house prices set record: Real Estate Institute December data

National house prices set records for the fourth month in a row in December, according to the Real Estate Institute which released new data this morning.

Sales in the Christmas month set a new median house price of $749,000 which chief executive Bindi Norwell said continued the pattern. In December 2019, the national median house price was only $628,000.

But the number of houses on the market has plummeted, putting further pressure on the stretched sector.

“As the total pool of properties available for sale falls to record lows, this is continuing to put pressure on house prices, with the country seeing a new record median house price for the fourth month in a row,” REINZ said of its new data.

National house prices could rise by as much as 13 to 16 per cent in the next few months.
Economists at Westpac, ASB, BNZ and Kiwibank say low interest rates and high demand will continue to have an impact in the new year.

The economists’ predictions vary, but they agree that 2021’s housing market will build on records set last year. These predictions come despite the Reserve Bank’s scheduled introduction of tougher lending rules for investors in March.

Norwell said 8935 properties were sold nationally last month, up 2392 sales on December 2019.

“That’s an additional 77 properties sold every day in December, which is a pretty remarkable result and shows what a strong position the property market finished 2020 in,” Norwell said.

Norwell said low listings pressured the market.

“We have half the inventory levels of December 2018, therefore, there just isn’t enough choice for people looking to purchase which has meant that there is significant pressure being placed on house prices in most parts of the country.

“When you add into the equation the fact that there are record low interest rates, it means that people are more willing to compete to secure the property they want,” she said.

Lack of choice and high confidence levels resulted in properties being sold at the quickest pace in 17 years.

The median number of days to sell is just 27 days when it is usually above 30.

Owen Vaughan, editor of NZME-owned property listing site, said buyer demand outstripping supply has been big challenge for the market since the country came out of the Covid lockdown.

“Summer is traditionally a quiet time in real estate but OneRoof figures show buyer enquiry for December and the first two weeks of January significantly up on the same period last year.

“Buyers are scrambling to make the most of low interest rates and there’s been huge interest in the limited stock that is available, with agents in Auckland reporting packed open homes last weekend,” Vaughan said.

“This will put upward pressure on prices, and buyers should expect that heat won’t leave the market any time soon,” he said.

The REINZ House Price Index, which measures the changing value of property, rose 17.3 per cent annually to 3417 a new high.

Eleven regions had double-digit annual growth, the first time in 15 years the index had been that strong, REINZ said.

Herne Bay, Auckland's wealthiest suburb. Photo / file
Herne Bay, Auckland’s wealthiest suburb. Photo / file

Auckland’s median house price jumped 17.4 per cent annually from $886,000 in December, 2019 to $1,040,000 last month. That was a new record and the fifth consecutive month where Auckland has seen a new record median house price, she said.

Gisborne’s median annual house price jumped 43.9 per cent annually, from $410,000 in December 2019 to $590,000 last month.

West Coast’s median rose 31.9 per cent from $216,000 to $285,000, Manawatu/Wanganui is up 31.3 per cent from $402,000 to $528,000, Hawke’s Bay up 27.3 per cent from $520,000 to $662,000, Northland up 25.2 per cent from $539,000 to $675,000, Taranaki up 19.6 per cent from $418,000 o $500,000, Wellington up 18.6 per cent from $685,000 to $812,251, Waikato up 17.4 per cent from $575,000 to $675,000 and that is the eighth month in a row of record high medians for that city.

Canterbury’s median jumped 16.5 per cent annually from $460,000 to $536,000, the fifth consecutive month of record median prices.

Nelson’s median rose 12.7 per cent from $605,000 to $682,000.

On January 6, Auckland’s biggest agency released its December data which showed 1479 sales for an average $1,092,518 and median $1,005,000 Barfoot & Thompson said.

That was almost a record December and the sixth month the agency had sold 1000 homes.

“Only once before have we sold more than 1000 homes in a December and that was in 2014 when the market was building towards the peak of the last price cycle,” said managing director Peter Thompson.

one roof

On January 5, CoreLogic said the market showed no signs of letting up with near-record growth registered nationally in December.

National annual house values rose 2.6 per cent in that month alone and the final quarter was up 6.1 per cent, a rate not bettered since the three months ending February 2004, that business said.

ASB Bank economists noted today that residential consents for the November 2020 year rose to 38,604, the highest since 1974.

Consents were issued for 16,293 Auckland projects in the year, the highest on record.

“Strong construction activity and slowing population due to the border restrictions should act to bring the housing market more into balance and help cool house prices,” ASB said today.

New Zealand now also has 2.3m paid jobs in the year to December, a record which illustrated our economy’s resilience, ASB said.