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Market consolidates at new pace.

March solidifies the changes in the market seen over the past months as pressure on property prices eases, inventory levels increase, demand softens and sales activity decelerates, according to the latest data from REINZ.

Median prices for residential property across New Zealand increased 7.9% annually, from $825,000 in March 2021 to $890,000 in March 2022.

While we continue to see prices increase annually —in all but one region — the rate of growth is slowing, sales activity is down and the median days to sell is up. We’re seeing the market moderate as people settle into this phase of the property cycle.

Jen Baird, Chief Executive at REINZ, says, “The impact of tighter lending criteria, LVRs, and increasing interest rates coupled with inflation, continue to reduce the pool of buyers who are willing and able to pay market prices. The increase in interest rates over the past months presents one of the greatest impacts to the market.

What we are seeing is that transactions are happening and properties are changing hands — just not as quickly.

While we still see annual increases in terms of the REINZ House Price Index (HPI) in all areas, the rate of annual increase is decreasing and we have come down 4.3% from our peak in November. In March, only two regions – Otago and Southland — saw a month-on-month increase. 

The median days to sell in New Zealand excluding Auckland also increased by eight days to 34.

In March 2022, for New Zealand excluding Auckland, inventory increased 33.8%, from 11,155 one year ago to 14,923.”

Fast facts for Invercargill City:

 March 2021March 2022
New listings to the market (Dwellings & land)164 properties124 properties
REINZ Reported Sales (Dwellings & land)175 sales124 sales
Average Days on Market (Dwellings only)23 days32 days
  • Top three selling suburbs / areas March 2022: Otatara (17), Windsor (13) & Strathern (8).
  • Unprecedented 9 sales at / + $1.0m reported for March.
  • Auction sales a modest 4% of the 124 sales reported Mar-22.

Data Source: REINZ

Moving the needle; a case of yes and no.

Real Estate update for Invercargill.

“Southland reached a new record median house price of $486,000 this February — an annual increase of 24.6%. “The most active buyers in the market were owner-occupiers backed by equity. There is strong demand from upper-end buyers moving from other areas of New Zealand as people reassess their goals and look for a lifestyle change.

For New Zealand excluding Auckland the total number of properties available in February increased 53.5%, from 8,633 February 2021 to 13,253 February 2022.

With an increase of stock in the region, attendance at open homes was lower across most of the market, and auctions saw fewer bidders and cash buyers. Vendors are starting to understand the shifting market and adjusting their expectations and approach to selling.

Jen Baird REINZ CEO.

  • Median Sell Price of Dwellings-Invercargill City: Feb-22 $484,500 / Jan-22 $425,333 / Feb-21 $388,200.
  • Days to sell Feb-22 of 37 days (10-year average is 39 days).

The following graph highlights the upward trend on new property listings to the market across Invercargill City since November 1st.

Why Southland’s future is renewable

Southlanders have a well-earned reputation for being enterprising, resourceful, and ‘getting stuff done’ – the attitude which made the Southland Plains one of Aotearoa’s most productive agricultural bases and, as the world shifts to a low-carbon future, is turning the region’s renewable energy advantage into promising new opportunities.

Read on click here.

Source: New Zealand Herald

The average size of dwellings is trending smaller.

We can see from the graph that in the 1970s the average new house size was just over 110 square metres. In the 1990s it was 160 square metres, and in the 2000s almost 190. Now, the ten-year average has fallen to 180 square metres and the average for the past year has been just 156 square metres.

A key reason for the change in average floor area is that in most locations fewer houses are being built and more units are appearing – mainly as townhouses but also some apartments and retirement units. Nationwide, the proportion of dwellings built which are standalone dwellings has fallen to around 56% from over 80% ten years ago.

This change is most noticeable in Auckland where in the past year the proportion of dwelling consents which are for dwellings has fallen from around 78% to 37%. For the rest of New Zealand, the change has been from around 83% to 69%.

Source: Tony Alexander -Independent Economist and Speaker. Tony’s Views 29-04-2021

Government’s Housing Policy Changes.

Initial thoughts following the Government’s announcement yesterday of integrated measures to build new homes, freeing up land for residential development and infrastructural investment.

First Home Loan & Grant.

  • Good news that the maximum yearly income for a single person has increased 11.7% to $95,000 and combined maximum incomes increased 13.35% to $150,000.

Price Caps for New Homes:

The First Home Grant can be used to help purchase new builds with the total combined costs for the land purchase and the house construction to be within the relevant house price caps. For Southland the cap is $500,000

New build properties include:

  • newly built dwellings that received a building code compliance certificate less than 12 months before the date you apply for the First Home Grant
  • vacant sections that will be built on
  • house and land packages purchased off the plans

Housing Acceleration Fund:

  • $3.8 billion to speed up housing developments. To leverage benefits across our region is very much dependent on the supply response from local and regional councils and the private sectors to make available residential land and build opportunities at affordable price points. The Bright-line Test for new builds remaining at 5 years represents a tangible benefit for those seeking a healthy home constructed to the new building code.
  • Further economic value add for our region derived from a busy construction sector and employment through targeted skills-based training would also sit in the good news column.

Extending the Bright line test from five to ten years for second/ investment properties:

  • This is where it gets interesting for many people who have saved to have sufficient equity to purchase a second property to reflect their financial position, stage of life or overall financial goals.
  • Investors will likely not over react, and take time to consult and validate their strategy to buy.
  • Recalibrating thinking for a longer hold is not all bad, as it’s well know in both property and shares, the long-term investors are the ones who succeed achieving their goals.
  • Holding rental investments for a minimum ten years would likely create the need for owners to maintain their property asset beyond the base of simply meeting compliance for the five Healthy Homes Standards to rent the property.
  • Whether or not tenants become unwitting pawns, and left paying the price for these changes we hope does not play out in our region.

From a Government standpoint, you don’t eat the vegetables planted today, so only time will tell how the new measures deliver good news for first home buyer’s and non-owner property occupiers.

Median house prices in Southland increased 22.5% annually

Bindi Norwell, Chief Executive at REINZ says: “The unrelenting pace of property sales continued in February, with a 14.6% uplift on sales volumes compared to the same time last year; the highest number of properties sold for the month of February in 14 years.

It’s highly likely that some of this uplift can be attributed to both investors and owner-occupiers looking to purchase ahead of the LVR restrictions coming back into effect in March and the slight uplift in listings we’ve seen over the last couple of months.

“Median house prices in Southland increased 22.5% annually in February from $320,000 in 2020 to $392,000 in 2021. Activity in the region is expected to remain steady with potentially lower levels of investor interest in the coming months as LVRs return.”

The median sell price for Invercargill City last month was $390,000.

Southland -Compared to February 2020

• Median Price up 22.5%

• Sales Count up 15.3%

• The current Days to Sell 23, is much less than the 10-year average

The full REINZ Report for February 2021, click here to view.

Southland-the highest increase in house values for the South Island

Southland: “Median house prices increased 13.6% year-on-year to $375,000 in December 2020, up from $330,000 in December 2019. The strength of the market locally saw Southland with the highest increase in house price values for the South Island with a 15.7% increase in the HPI year-on-year.

The market has remained relatively steady over the last few months with sales volumes increasing 25.5% year-on-year from 157 in December 2019 to 197 in December 2020 – this is the highest sales count for a December month in 14 years. Listings increased 23.2% annually with 170 new properties coming to the market in December, however recent high sales volumes have resulted in inventory decreasing -19.7% year-on-year to the lowest level on record. Looking forward, we would expect to see the market continue in a similar manner in the coming months.” Bindi Norwell REINZ CEO

  • The current Days to Sell of 22 days is less than the 10-year average for December which is 32 days.

New Zealand: The highest number of properties sold in NZ in a December month, ever! The number of residential properties sold in December 2020 across New Zealand increased by 36.6% from December 2019 (from 6,543 to 8,935) – the highest number of properties sold in a December month since REINZ records began.

https://www.reinz.co.nz/residential-property-data-gallery

The Clock has Started Again.

Another four years is usually reserved for rugby teams unsuccessful at Rugby World Cup to get sorted before the next event. In this instance Southland has a further four years to conceive and unleash a credible plan for transition of the Tiwai Point aluminium smelter.

https://www.nzherald.co.nz/business/power-play-meridian-energy-reaches-deal-with-rio-tinto-over-tiwai-point-smelter/3OYQZHLDUOI5F2AL3KMBX3SIIY/

Serve the Moment!

Serve the moment, as hindsight alone lets us know when trends have changed.

Bindi Norwell, Chief Executive at REINZ says “November was an incredible month in terms of the number of properties sold, with just shy of 10,000 properties sold over 30 days (9,885). The last time we saw a similar level of sales volumes was back in March 2007 – 164 months ago – before the national recession and Global Financial Crisis started impacting New Zealand’s property market.”

No Property Park Up Pre Elections 2020

Highest number of properties sold in NZ for 42 months, according to latest REINZ data The number of residential properties sold in September across New Zealand increased by 37.1% from the same time last year (from 6,112 to 8,377

Bindi Norwell, Chief Executive at REINZ says: “Normally one month out from an election, people start to take a wait and see approach and sales volumes begin easing off. However, 2020 appears to continue in its trend of being an anomaly, with the number of properties since March 2017, when the country was last experiencing such growth.

Highlighting just how much sales volumes around the country continue to defy expectations, 13 regions had annual sales volumes increases in excess of 20% and 10 regions had increases in excess of 30% – the highest number of regions with this level of sales volume increase since April 2015,” continues Norwell.

Read the REINZ market report here: