House prices continue to “defy expectations”

According to the latest data from the Real Estate Institute of New Zealand (REINZ), house prices continue to rise despite expectations of a winter respite. 

So, what’s happening in the property market? Read on for our latest update. 

Market remains active despite second-lowest inventory levels 

June was another active month in the housing market. The median house price across New Zealand rose by 28.7 per cent compared to June 2020 (from $637,000 to $820,000 in June 2021). Compared to May 2021, house prices saw an increase of 0.3 per cent nationally, and over half of the regions saw an uplift in prices. 

“The market is refusing to cool,” said Jen Baird, chief executive at REINZ. “House price rises have continued to defy expectations, with every region [seeing] an uplift in HPI values compared to the previous month – and the three months prior – suggesting that the market will hold strong for a few more months yet.” 

Five regions saw record median prices year-on-year and one was a record equal: Auckland (up by 25 per cent from $920,000 to $1,150,000), Waikato, Taranaki, Marlborough and Southland. Manawatu/Wanganui saw a record equal high in June 2021. 

June 2021 also saw New Zealand’s second-lowest level of inventory ever – down by 33.3 per cent to 13,861. 

What’s more surprising is that, despite growing prices and low supply, June 2021 saw the highest number of properties sold in a June month in five years. “Reports from agents around the country are that there are still good numbers of attendees at auctions and open homes; and that both first-time buyers and investors are still relatively active in the market,” said Baird. 

What does it all mean for the housing market? 

As economists have found, trying to predict how the market will perform in the coming months has proven even more difficult in this Covid-19 era. But after months of gravity-defying house prices, it’s safe not to expect a dramatic drop this winter. 

“Today’s data really points to how important it is to address the housing supply issues we have,” said Baird. Unless there are any significant changes in this space, most economists expect the housing market to maintain the same pace for the next couple of months. 

As for mortgage rates, we’ve already started to see some increases across the board, although it’s important to note that they remain at historically low levels. It’s not yet clear what the impact of these increases will be on property prices – only time will tell, but rising rates may have a dampening effect.