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.