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SEPTEMBER BULLETIN 2008

NEW ZEALAND RESIDENTIAL UPDATE

Provincial New Zealand appear to be feeling the early joys of spring as the residential property market staged an unexpected recovery in some areas in July, according to the Real Estate Institute of New Zealand (REINZ). The national median sale price was maintained at its level of the previous month at $340,000. Furthermore, this is only 3.5% less than the national peak of $352,000 recorded in November 2007.

The volume of sales increased as well for the month, although it is still at a very low level, compared with previous years. In July there were 4,489 residential dwellings sold throughout New Zealand, almost 200 more than were sold the preceding month. Moving into the warmer months we typically see more market activity and an early start will certainly help to bolster peoples’ confidence.

On a regional level, it seems to be the metropolitan areas which have been affected most by value depreciation. Over the last 12 months Auckland’s median dwelling price has decreased 5.4% to $421,000. The Canterbury residential market has lost some heat as well over the last year, with the median residential dwelling price dropping 3.2%.

In contrast, New Zealand’s rural centres are generally tracking better than their metropolitan counterparts. Otago’s median house price is up 5.3% on that recorded in July 2007. Also, Taranaki, which is driven almost entirely by the dairy and energy industries, has experienced median residential dwelling price growth of 3.9% over the last 12 months.

Of particular note is the Central Otago Lakes District, which has a 12 month growth rate of 24.9% since July 2007. Due to the relatively small market in this area, their statistics need to be treated with caution as low sales volumes can easily skew market trends. However, a median dwelling sale price of $565,000 is significant, particularly under current economic conditions.