Home sales

New Zealand home sales cool, prices down 8% from November peak

By Stephen Wright

WELLINGTON, New Zealand – Home sales fell in New Zealand in June as moderation in prices from last year’s stimulus peak prompted buyers to be cautious, while sellers hoped to preserve their recent quick capital gains.

The number of homes sold in June fell about 38% from a year earlier to 4,721 units and was down 17% from May. The median number of days to sell rose to 44 from 31 in June last year, another sign of a falling market.

The national median sale price for June was up from May and from a year earlier, but the annual rate of increase was moderate compared to 30% gains in 2021, according to figures from the Institute. New Zealand real estate published on Wednesday.

“There’s a lot more trading going on in the market today,” said real estate institute chief executive Jen Baird. “Buyers are more cautious of potential price drops after buying, and sellers naturally want the best possible prices in an uncertain market.”

House prices in New Zealand have risen by around 45% in 2020 and 2021, boosted by expansive fiscal and monetary stimulus in response to the Covid-19 pandemic and a long-standing housing shortage.

Price increases have slowed since late last year after the central bank tightened lending rules and raised interest rates. Changes to consumer credit regulations, which made it more difficult to obtain financing, and the government’s removal of tax benefits for property investors, also blunted demand.

The national median sale price of 850,000 New Zealand dollars ($521,000) in June was 4.2% higher than a year earlier and 1.2% higher than in May. The June median price is down 8.1% from its record high of NZ$925,000 in November last year.

“As the market stabilizes and the strong growth we’ve seen through 2021 dissipates, downward pressure on prices could improve affordability,” Ms Baird said. “However, this is offset by higher mortgage costs and broader economic headwinds which may continue to dampen people’s appetite to enter the market, either as a buyer or a seller.”

Write to Stephen Wright at [email protected]