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Late last week the Real Estate Institute of New Zealand reported that Auckland recorded a median house price of $1.03 million in November, after making history the previous month when hitting the million-dollar mark for the first time. Now Wellington City is hot on Auckland’s heels, recording a median house price of $980,000 in November, although this is not a race we really want to join. At a national level, annual house price inflation of 18.5% lifted the national median price to a record $749,000, up from October’s record of $725,000, driven by record median prices in eleven of the sixteen regions. At the same time, volumes sold increased by 30% nationally, with new listings overwhelmed by buyers expecting prices to rise further. REINZ CEO, Bindi Norwell, observed that “Part of this is likely to be attributed to people wanting to purchase property ahead of Christmas, partly due to the Reserve Bank announcing in early November that it would undertake a consultation in December to re-introduce LVRs earlier than planned, but also due to this underlying fear that prices might increase even further in the coming months”. At a regional level, Wellington was again one of the regions to register a record median price and remained the second highest regional price behind Auckland. House prices in the Wellington region were up by 14.5% over the year, to record a median price of $790,000.  Within the region, Wellington City prices surged 11.9% over the month and 22.5% over the year to record a median price of $980,000. The median house price in Porirua City has fluctuated in recent months, recording an annual increase of 11.2% in the year to November to $800,500, easing from a spike of $895,000 the previous month. In recent months, we have witnessed a trend of people looking to the surrounding districts for opportunities to find a more reasonably priced property, particularly given new opportunities to work from home presented by our experience with lockdowns in 2020. Reflecting this, price growth has been strong throughout the Wellington region.  Median house prices in the three districts in Wairarapa have each recorded record highs at one point in October or November:
The Kapiti market has also witnessed strong demand amidst similar themes, experiencing a record median price of $780,000, up 22.7% on a year earlier. In the Hutt Valley, Lower Hutt experienced a 19.0% annual increase in the median house price to a record $770,000, while Upper Hutt recorded a 12.0% annual increase to $689,000.  Wellington is one of the regions with the lowest inventory levels, at just 6 weeks, which in turn continues to constrain sales growth. Reflecting this additional constraint, annual sales growth of 6.3% was well below the national figure of 29.6%.
In line with these dynamics, properties in the Wellington region continue to sell quickly, with the median days to sell of 28 days reported as the lowest for a November month since 2006. The REINZ had the following observations for the region:
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Earlier this week the Real Estate Institute of New Zealand released their Monthly Property Report for the month of October in which Chief Executive, Bindi Norwell, commented that “October 2020 will go down in ‘housing history’ as being the point in time when Auckland region’s median house price hit the million-dollar mark for the first time – something no one anticipated or expected just six months after the entire country came out of lockdown”. At a national level, annual house price inflation of 19.8% lifted the national median price to a record $725,000 in October, driven by record median prices in ten of the sixteen regions. At the same time, volumes sold increased by 25% nationally, as new listings got gobbled-up by purchasers expecting prices to rise further. Previously, we had expected that some of the pressure on the housing market might ease as new listings came on to the market during Spring. Instead, new listings have translated to more sales and hectic activity, but the pressure has not eased. This appears to reflect a determination across all buyer groups to buy now, before prices potentially rise even further. This is being facilitated by low interest rates and the prospect of lower interest rates, providing the opportunity to service the higher debt levels that higher house prices demand. Wellington was again one of the regions to register a record median price and remained the second highest regional price behind Auckland. House prices in the Wellington region were up a whopping 5.4% over a month earlier and 20.8% over the year, to record a median price of $785,000.  Within the region, Porirua City recorded the highest median price, ahead of Wellington City. House prices in Porirua City were up 31.3% over the year, to take the median price to $880,000, a touch above the median price in Wellington City, which recorded more modest house price growth of 6.8% over the year and a median price of $876,000.  Broad pressure on the Wellington market is reflected in six of the eight districts in the region reporting record median prices in October, including Porirua City ($880,000), Wellington City ($876,000), Kapiti Coast ($772,000), Lower Hutt City ($761,000), South Wairarapa ($710,144) and Masterton District ($531,000). The other two regions are Upper Hutt City ($655,000) which peaked in September and Carterton District ($564,000) which was just short of its June peak of $565,000.  Fear of Missing Out continues to be a common theme across the Wellington region, which has the lowest levels of inventory across the country at just 6 weeks, along with Manawatu/Wanganui. Unlike the national picture, sales volumes in the Wellington region remained similar to the level recorded in October 2019, a reflection of these low inventory levels. In contrast, the number of properties sold across New Zealand was up 25% from the October 2019 level, to record a 14 year high for the month of October. As a result, properties in the Wellington region are selling quickly, with days to sell falling to 26 days - the lowest level for an October month since 2006. The REINZ commenting that they expect this pressure to continue in a similar manner over the coming months as demand continues to outstrip supply. #mortgagelinkkapiti #mortgagelink #REINZ #property #Kapiti #Wellington
A number of factors suggest that the Reserve Bank is backing away from further cuts in the Official Cash Rate next year, as had been previously foreshadowed. This doesn’t mean that bank lending rates are on hold, rather the Reserve Bank is putting more reliance on another transmission mechanism – the new Funding for Lending Program - in an environment where the economy has rebounded more sharply than expected. The economy’s rebound has taken most economists by surprise. The housing market in particular is on fire, although the Reserve Bank has been at pains to point out that it is neither their fault, nor their remit. More recently, we have had the news that researchers are honing-in on a vaccine, raising expectations that borders will eventually open-up and disruptions ease. While the risks remain to the downside, this setting provides the Reserve Bank with the latitude to assess the success of it’s new Funding for Lending Program in lowering bank lending rates, before resorting to cutting the Official Cash Rate and taking it into negative territory. In this environment, the Reserve Bank appears to be leaning towards this new tool to achieve lower bank lending rates. This has led economists to pare-back their forecasts for further reductions in the Official Cash Rate, while acknowledging the risks are still to the downside, depending on the success of a vaccine, New Zealand remaining Covid free, the path of recovery and the Funding for Lending Programme. Either way, it is the transmission mechanism not the end-result that is at stake here, this is about encouraging banks to pass on funding cost reductions to their lending rates in order for monetary policy to transmit effectively. Specific details of the Funding for Lending Programme are due to be released prior to the launch of the scheme in early December. At this point, we can expect to see further downward pressure on bank lending rates.  #Mortgagelinkkapiti #Mortgagelink #mortgage #Kapiti #Welllington Last week’s REINZ property statistics indicated that lower and lower interest rates are feeding into higher and higher property prices, with buyers taking advantage of low interest rates and serviceability to get into a market that some fear will keep rising. In short, fear of missing out is trumping any concerns that the full extent of economic weakness from the Covid-19 epidemic is yet to be realised. We might have expected some of the pressure on the housing market to ease with new listings starting to come on to the market in Spring, however, strong demand continues to outweigh inventories meaning that properties continue to sell quickly. REINZ CEO, Bindi Norwell, also noted that we might have expected to see people taking a wait and see approach ahead of the election, but this was not the case. At a national level, annual house price inflation of 14.7% lifted the national median price to a record $685,000 in September, driven by record median prices in nine of the sixteen regions. Wellington was one of the regions to register a record median price, following a 13.1% annual increase in the median price to $735,000 in September, from $650,000 a year earlier. As a result, the Wellington region remained the second highest regional price, behind Auckland.  Prices continued their march higher in the Wellington region despite increases in new listings in August and September, with the REINZ observing that the “fear of missing out” is a contributing factor. Within the region, record median prices were recorded in Wellington City ($862,000), Lower Hutt City ($702,000), Upper Hutt City ($710,000) and Kapiti Coast District ($704,400). The record median price in Wellington city followed a 6.1% increase in the median price over the year. Just north of Wellington, Porirua City recorded a 3.5% increase in the median price to $725,000. Record median prices were recorded in Lower Hutt City and Upper Hutt City following strong house price inflation of 18.0% and 25.4% respectively over the year. Kapiti and the Wairarapa continue to reflect strong interest from people looking to the surrounding districts given the new opportunities to work from home. The median price on the Kapiti Coast reached a record $704,000 in September, following a 14.5% increase over the year. The Wairarapa echoes similar tight demand/supply dynamics. Carterton, with a median price of $464,000, recorded annual house price inflation of 3.1% on low volumes. Sales volumes were up in Masterton which recorded an 8.8% increase in the median price to $451,500, while South Wairarapa recorded a 33.3% annual increase in the median house price to $653,000.  Overall, sales have plateaued in the Wellington region, following a rebound in June and July. Post lockdown sales eased slightly in September but remained 20.8% higher than prevailing a year earlier.  The Wellington region’s average days to sell fell by 2 days in September to 27 days, reflecting ongoing tightness in the market – this figure is 5 days less than the 10-year average for September of 32 days. This is also reflected in tight inventory levels. The REINZ made the following observations with respect to the Wellington market:
Some economists continue to sound a note of caution in housing market commentary that is well reasoned, pointing to challenges associated with weak migration, the end of government support, mortgage holidays drawing to an end and closed borders that are yet to be fully realised. For the moment though, the market is not conforming to reason. Instead, short supply has been met by strong demand and a fear of missing out, underpinned by support from low interest rates, the prospect of rates moving still lower, returning Kiwis, investor interest and first time buyers trying to get into the market. To discuss your options, please feel free to contact me at john.bolsover@mortgagelink.co.nz It costs nothing to ask and you might be pleasantly surprised at the difference that good advice can make. 
Latest data from the REINZ revealed that the property market continued to surpass expectations in August, supported by low interest rates, the prospect of rates moving still lower, a lack of listings, ongoing post-lockdown demand, the removal of LVR’s and first time buyers trying to get into the market. Activity continues to be underpinned by strong levels of interest and engagement from all buyer levels, including first home buyers, investors and families looking to upgrade their property. REINZ CEO, Bindi Norwell, noted that we may start to see additional pressure on house prices and affordability unless we see more listings coming onto the market before Christmas. At a national level, the median house price recorded an annual increase of 16.4%. The national median house price was $675,000 in August, compared to $659,000 in July and $580,000 in August 2019. The Wellington region again recorded double digit price growth, with annual house price inflation lifting to 12.8%, taking the median price to $720,000 from $696,800 in July. As a result, the Wellington region remained the second highest regional price, behind Auckland.  Within the Wellington region, prices in Wellington city continued to hold above $800,000 as they have in recent months - recording a median price of $820,000, up 1.9% on a year earlier. Encouragingly for buyers, new listings were up 27% compared to a year earlier. Prices in the Kapiti Coast district remained close to July’s record median price of $700,000, recording a median price of $698,000 in August, up 14.4% over the year. Record median prices were recorded in Lower Hutt City and Upper Hutt City of $670,000 and $663,200 respectively, the cities recording annual house price inflation of 22.5% and 14.9% in August. The Carterton, Masterton and South Wairarapa districts all continued to record strong annual house price growth in August, recording median prices of $480,000, $470,000 and $560,000 respectively. Adding a bit more balance to the market, new listings increased by 91.2% compared to the same time last year. Double digit house price growth is in the wake of strong interest from people looking to move out of Wellington for the lifestyle.  Sales in the Wellington region stabilised in August, following a rebound in June and July. This post-lockdown activity meant that the sales count of 766 sales was up 31.8% on the level in 2019.  The Wellington region’s average days to sell of 29 days was unchanged from July, reflecting ongoing tightness in the market – this figure is 6 days less than the 10-year average for August of 35 days. This is also reflected in tight inventory levels. The REINZ made the following observations with respect to the Wellington market:
All this points to a market influenced by short supply amidst strong levels of interest and engagement from all buyer levels, underpinned by support from low interest rates, the prospect of rates moving still lower, ongoing post-lockdown demand and first time buyers trying to get into the market.
Latest data from the REINZ revealed that the property market continued to defy “expectations” in July, supported by pent-up demand and perhaps post-lockdown relief. REINZ CEO, Bindi Norwell, noted that activity during July was underpinned by strong levels of interest and engagement from all buyer levels, including first home buyers, investors and families looking to upgrade their property. At a national level, the median house price recorded an annual increase of 14.8%. The national median house price was $660,000 in July, compared to $638,000 in June and $575,000 in July 2019. The Wellington region again recorded double digit price growth, recording a 10.6% increase in the median house price over the year to July, to $696,800. This was also a marked increase over the June median house price of $685,000, meaning the Wellington region remained the second highest regional price, behind Auckland.  Within the Wellington region, a record median house price of $695,000 was recorded for the Kapiti Coast District, following a 19.2% increase in the median price over the year. While Kapiti was the only region to register a record median price, the Carterton, Masterton and South Wairarapa districts all recorded sharp annual house price growth of 36.1%, 19.2% and 25.5% respectively.  The rebound in sales in the Wellington region from their lock-down lows was maintained in July, recording a 2.1% increase from the June level and 22.8% increase from the level recorded a year earlier in July 2019. The REINZ note that July was the highest July sales count (764) for the region since July 2007. The average days to sell fell by 6 days to just 29 days, reflecting a tight market. This is also reflected in tight inventory levels. The REINZ made the following observations with respect to the Wellington market:
 All this points to cautious optimism in the market, in the midst of uncertainty in the wake of the Covid-19 pandemic. The lockdown has forced people to focus locally, which is highlighted by Bindi Norwell’s comment that there were strong levels of interest and engagement from all buyer levels. Bindi Norwell also noted that anecdotally August has had a great start, adding a note of caution now that Auckland has gone back into level 3. Source: REINZ Monthly Property Reports
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December 2020
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