REINZ Residential Update

December showed a continuation of recent trends in the residential property market, according to the latest data released from the Real Estate Institute of New Zealand (REINZ). The total number of transactions completed in New Zealand in December was 4,302, just 30 more sales than completed the preceding month and just slightly less than the average monthly volume of sales for the last nine months.

Likewise, the median sale price decreased slightly over December to $328,500. This is 2.7% lower than the November 2008 median and a 4.8% reduction on the December 2007 median price, according to REINZ. Furthermore, we are looking at an overall reduction in the median sale price from the November 2007 peak of 6.7%.

On a regional level, Taranaki and Wellington have maintained the most neutral positions in terms of median sale prices, with the December 2008 median matching December 2007, according to REINZ. Nelson and Marlborough and Southland showed the biggest annual decline in median price, with both regions dropping over 10% in value. The only region that showed positive value gains in 2008 was Central Otago Lakes with a 2.0% increase.

The biggest trend throughout 2008 was the decreased volume of sales as consumer confidence took a significant turn for the worse, removing much needed purchasers from the market. Declining interest rates and decreased median sale prices has made residential property investment more viable. However, a combination of tightened credit controls from lending institutions and reduced confidence in the employment market has counteracted these positive factors. Once employment confidence moves back to positive territory we should expect to see increased activity in the residential market, but it will take a sustained period of increased activity before we begin to see significant median price growth.