Houses prices across the country remained flat in February, with weaker prices in Auckland offsetting a rise in house prices across Otago and in Northland. We take a closer look at housing market data from February 2017, to determine whether this is the start of a much-needed correction in the housing market.
Median house prices fall in Auckland and Hamilton
Latest data from valuation and property services company QV, shows a small dip in house prices over February, predominantly in the Auckland and Hamilton regions. The median house price in Auckland fell by $5,000 during February and sales volumes were down 8.9 per cent.
"There is a strong sense now that the Auckland market has peaked," Westpac senior economist Michael Gordon said.
In other areas around New Zealand, the rate of increase has slowed dramatically. In contrast, the Central Otago Lakes region recorded the highest annual increase in median price; a staggering 30 per cent rise, followed closely by Northland at a 20 per cent rise in prices and Otago at 18 per cent.
House sales dipped
House sales have slowed sharply to the lowest level since 2011. Whether this is down to a shortage of housing stock, tougher lending restrictions, or market uncertainty is hard to determine.
REINZ chief executive, Bindi Norwell, said fewer properties were being sold at auction, particularly in Auckland, and that it appeared the loan to value lending restrictions imposed on banks were having an effect.
"We hear anecdotally that LVRs are having an effect and banks are reducing lending, becoming more selective about who they lend to, what properties they will lend on and the terms.
"Recent media has noted the lower level of cash incentives being offered by banks, and this ties in with the feedback agents across the country are hearing from their clients."
House sales vs. house prices
While sales volumes remain at these low levels, economists predict that house prices will barely rise this year, based on past correlation. Property demand remains strong, however, driven largely by population growth and a continued shortage of housing supply so it’s unlikely this dip signals any correction in the housing market.
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