Property prices still up year on year – for now, says 21 Century boss

Prices continue to increase annually – in all but one region – but the rate of growth is slowing, REINZ says

Property prices still up year on year – for now, says 21 Century boss

New Zealand house prices overall remain up year over year, but things are slowing, according to Tim Kearins, owner of Century 21 New Zealand.

His comments follow REINZ’s release of its Monthly Property Report for March, which reported a 7.9% increase in median house prices across New Zealand compared to the same time last year. REINZ said that while prices continue to increase annually – in all but one region – the rate of growth is slowing.

Read more: Vendors start to adjust their sights – Century 21 boss

The national median house price is now at $890,000, up from $825,000 in March 2021, and up from $885,000 the previous month.

“Let’s not forget we’ve come off the back of a crazy couple years,” Kearins said. “House prices soared to unsustainable levels and money was cheap. What we are now seeing is some of those unrealistic gains being clawed back. At the same time, good properties in strong demand continue to make great money.”

Kearins said New Zealand’s real estate market was badly affected over summer by the Credit Contract & Consumer Finance Act (CCCFA), which required lenders to conduct ultra-conservative assessments on all new borrowers, pushing many prospective homeowners out of the housing market.

Read next: CCCFA has caused first-home-buyers to fall out of market, according to REINZ

Last week, the Ministry of Business Innovation and Employment (MBIE) released the draft proposed changes to the CCCFA, with public consultation closing on April 20 and the final changes set to be enacted in June. 

“People still want to buy houses,” Kearins said. “These softer March numbers, however, reflect the fact that borrowers have been smacked with [the] biggest credit crunch since the Global Financial Crisis. Some significant tweaks to the CCCFA this winter will hopefully enable more Kiwis to realise their homeownership dreams.”

Across New Zealand, the number of residential property sales dropped 33.5% from 10,151 in March 2021 to 6,752. The total number of properties available for sale nationally, meanwhile, lifted 32% from 19,437 in March 2021 to 25,659.

“Listings are up, and sales are down which means advertised properties are sitting around for a bit longer,” Kearins said. “We are now seeing, however, vendors getting more realistic with both parties increasingly arriving at a satisfactory place.”

Kearins said the Reserve Bank’s latest OCR hike by 50 basis points to 1.5%, the fourth consecutive OCR hike since October last year and the biggest jump in over 20 years, also needs to be put in context. 

Read next: What to do now that RBNZ has lifted cash rate

“Interest rates remain a lot lower than they have been in the past, while servicing a mortgage remains comparable, if not cheaper, for many paying sky-high rents,” he said. “It’s not a buyers’ market yet, but for those who can secure lending there are some great opportunities out there this autumn.”