Property owners looking to sell may need to "adjust their expectations" for what their house will sell for, REINZ says as it reports prices are growing, but at a "more moderate pace".
The Real Estate Institute of New Zealand (REINZ) on Monday released its property report for February, revealing the median price nationally for residential property increased 13.5 percent annually, from $780,000 in February 2021 to $885,000 last month.
Prices peaked in November ($925,000) before dipping in December and January. While February did see a monthly increase, it was a "moderate" 0.6 percent, says REINZ chief executive Jen Baird.
"Market sentiment has shifted over the past couple of months which is evident throughout our February data," she says.
"While prices remain strong - increasing annually in all regions - the number of sales continue to trend downwards and an influx of stock across New Zealand is easing demand side pressure, which may in turn further ease price growth in the coming months."
Baird says there is a fear of over-paying (FOOP) among buyers, who may also be feeling additional pressure from recent legislative and fiscal changes affecting their ability to borrow.
That includes recent changes to the Credit Contracts and Consumer Finance Act (CCCFA), which the Government last week made amendments to after a "significant drop in mortgage activity", as well as the reintroduction of loan-to-value ratios and increases to the OCR leading to rising interest rates.
"As a shift in sentiment sets in and buyers are less willing, or unable, to pay the prices we saw towards the end of 2021, pressure will come on vendors to adjust their expectations to meet the market," Baird says.
When excluding Auckland, the median residential property price increased 20.6 percent annually from $651,000 to $785,000 - a new record high.
Auckland's median price jumped 8.2 percent over the year to $1,190,000, the lowest annual percentage increase for the region since June 2020. The median there fell 0.8 percent in January.
Record median prices were recorded in Canterbury ($720,000), Taranaki ($665,000), Southland ($486,000), Otago ($810,000), Gisborne ($715,000) and Bay of Plenty ($960,000).
The largest annual increase in February was Canterbury with a 28.6 percent jump. Southland saw the largest monthly change, up 13.3 percent in January. Marlborough fell the most over the month, down 6.4 percent to $655,500 (though it was still up 6.5 percent annually).
"Canterbury continues to see a healthy increase in its median price, reaching a record high in February," Baird says. This continued growth is driven by districts such as Selwyn and Waimakariri, which have both reached record medians in eight of the past 12 months."
"Since its peak in November 2021, Auckland has seen a significant drop in the annual percentage increase at a level not seen since LVRs started to effectively curtail rapid property price rises in late 2015."
Nationally, the number of sales dropped 32.9 percent from 8324 in February 2021 to 5597 last month. While the sales count was up 48.8 percent on January, seasonally adjusted figures actually show a decrease of 3.2 percent "indicating this was a marginally weaker February than is typical".
A fall in sales was felt across all regions in February, including Auckland where they dropped 40.2 percent annually to 1741. That's the lowest February sales count for Auckland since 2019.
West Coast saw sales drop 55.6 percent from 90 to 40, the lowest for a February month since 2017. Taranaki suffered a 41.3 percent decrease from 206 to 121, the lowest for February since records began. Manawatu/Whanganui's fell 40.1 percent from 382 to 229, also the lowest since records began.
"While prices continue to increase, albeit at a more moderate pace, sales activity is down and with more property on the market, the supply and demand scale is tipping," says Baird.
While the appetite and demand for property remains, we are hearing from agents across the country that open homes and auction rooms are quieter.
"Record low levels of properties available for sale last year - as well as low interest rates and anticipation of LVRs - brought urgency to the New Zealand property market. However, towards the end of 2021, we saw a surge in the number of listings."
She says this has continued in February, with listing up 7.5 percent, "bringing more choice to the market". Hawke's Bay, Manawatu/Whanganui and Wellington all have over 25 percent more listings than February 2021.
"The increase in available properties and the subdued demand, is having a depressive effect on sales activity," says Baird.
"Market sentiment has shifted and with pressure to buy easing, we are seeing less competition, less urgency and fewer sales."
The median number of days to sell a property jumped 11 days to 42 in February, with only Tasman saying a decrease. The number of properties available for sale was also up, jumping 47 percent annually.
"After a prolonged period of low inventory in 2021, we have seen inventory levels rise nationwide for two months consecutively," says Baird.
"While the West Coast and Gisborne saw a decrease in stock in February, all other
regions saw increases, some quite significant. Inventory levels in Manawatu/Whanganui increased 161.7 percent, Wellington was up 143.4 percent, and Hawke's Bay increased 98.4 percent.
"With market prices still strong and more available properties available giving those who are upsizing, downsizing or looking for a change confidence, people are incentivised to sell – bringing more stock to the market. Further, with properties taking longer to sell in most regions, stock is building."
